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Final call for tax-filers - here's our last-minute tax-filing advice

Final call for tax-filers - here's our last-minute tax-filing advice
(Image credit: Pixabay)

American taxpayers are on their final warning that the July 15 tax-filing deadline is now just a few days away.

The coronavirus might have seen the usual April 15 deadline pushed back by three months this year, but the new end-date is now fast-approaching and the IRS has confirmed it will not be moved again

For those yet to file, the IRS has reminded taxpayers of the various tools and services available to help them meet their tax obligations, including those on its own website and the best tax software. But with the clock ticking, there is now no time to waste. 

Can I file my taxes for free?

When it comes to filing, even at this late stage taxpayers have several options open to them: 

  • If you have an income of $69,000 or less, you can use the IRS Free File tool to find tax software that you won’t have to pay for. 
  • Those with an income above $66,000 who are happy completing their own taxes can do so for free using fillable forms from the IRS. 
  • Similarly, there are commercial tax software packages that are specifically designed to help you prepare and file, most of which offer basic versions that are free of charge.
  • Find and use an authorized IRS e-File provider which can prepare and electronically file your return.
  • If you are a member of the military or a qualified veteran, you can file using the free online service MilTax

How can I get a faster refund?

For the majority of taxpayers, a refund usually awaits rather than a tax bill, and in the current economic climate, there are likely to be more people than usual that could put these funds to good use. 

Final call for tax-filers - here's our last-minute tax-filing advice

(Image credit: Pixabay)

The IRS advises that the quickest way to receive a refund is to file electronically and use its direct deposit program, which allows the money you are owed to be paid directly into your account.

If you’re waiting on a refund, the Where’s my Refund? tool on the IRS website can be used to check on its status. While most refunds are usually issued in less than 21 days, bear in mind that coronavirus-related staffing shortages at the IRS are still delaying the processing of paper tax returns. 

Can I still file a paper return?

It is still possible to file a paper return for this year, but your paperwork will need to be in the mail and postmarked by the July 15 date. As paper returns are being processed in the order they are received, the IRS is advising people to file online where possible, particularly if they want their refund in a timely manner.

Can I still file for an extension?

July 15 is not only the deadline for your tax returns, but also for filing for an extension if you need one. Individual taxpayers who need more time to file can request an extension to October 15 either by filling out Form 4868 using the free file link or your tax software, or by submitting an electronic payment and selecting the same form or extension as the payment type. 

Importantly, an extension to file is not the same as an extension to pay - your taxes are still due by July 15. And if you think you’re owed a tax refund for the 2016 tax year, but are yet to file for that year, there is no further extension to be had. Some 1.4 million taxpayers are owed $1.5 billion in refunds for 2016, but this money will only be distributed if people file a prior tax year return by July 15.  

Final call for tax-filers - here's our last-minute tax-filing advice

(Image credit: pixabay)

What can happen if I don’t file?

If you don’t file, you could face a failure-to-file penalty, which amounts to 5% of your unpaid taxes for each month your tax return is late, up to five months. If you file more than 60 days late, you’ll pay whichever is less: a minimum of 100% of the taxes you owe or “a specific dollar amount that is adjusted annually for inflation”. The specific dollar amount is $435 for returns due on or after January 1, 2020.

What can happen if I don’t pay my taxes?

If you don’t pay your tax balance by the filing deadline, the IRS can hit you with both a penalty and interest. So even if you can’t pay it all immediately, it is important to pay as much as you can. 

The penalty and interest are based on the amount you owe and how long you owe it. Late payment penalties are calculated at 0.5% of the unpaid tax balance per month, subject to a maximum of 25% of the unpaid tax. Interest on unpaid tax compounds daily from the original due date of the return until the date you pay in full, with the rate calculated as the federal short-term interest rate, which is currently 0.18%, plus 3%. 

If you’re struggling to pay your taxes, make sure that you still file. That way you will avoid the failure-to-file penalty that is often greater than the failure-to-pay penalty. 

Final call for tax-filers - here's our last-minute tax-filing advice

(Image credit: Pixabay)

Can I delay paying my taxes?

If you simply cannot afford to pay off your tax debt in one go, qualified taxpayers can approach the IRS to set up a payment plan. Arranging an installment agreement means you can pay off your balance over time, although interest and late-payment penalties will continue to build up on monies that remain outstanding. 

The IRS offers both short-term (paying within 120 days) and long-term (more than 120 days) payment plans, but your specific situation will dictate which option you are allowed. If debt is getting the better of you generally, the best debt consolidation companies could certainly be of help too. 

How can I check my tax status? 

If you’re unsure exactly where you stand in respect of your tax situation, taxpayers can securely access information about their federal tax account online at the IRS. Here, you will be able to find out how much you owe, access your tax records, review your payment history and see key tax return information for your most recent tax return as it was originally filed.

If you haven’t yet filed your taxes, you need to take action now. It is probably too late to approach a tax preparer, but the best tax software can help you quickly arrange your finances yourself and reduce the amount of errors that tax-filers typically make.  

With over 20 years’ experience in the financial services industry, Tim has spent most of his career working for a financial data firm, where he was Online Editor of the consumer-facing Moneyfacts site, and regularly penned articles for the financial advice publication Investment Life and Pensions Moneyfacts. As a result, he has an excellent knowledge of almost areas of personal finance and, in particular, the retirement, investment, protection, mortgage and savings sectors.