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Are you scared to look your tax professional in the eye? The deadline for taxpayers who requested an automatic six-month filing extension is fast approaching – and if Twitter is to be believed, many taxpayers still have to get their information to their tax preparers. Remember that most taxpayers on an extension must file their tax returns on or before the October 15 deadline.
About 10% of individual taxpayers, or 15 million people – including me – filed for an extension this year. Although October 15 typically marks the due date for those on extension, some taxpayers have more time to file. Members of the military serving in a combat zone normally have until 180 days after they leave the combat zone to file their return and pay any taxes due. Additionally, taxpayers who live in or are affected by a federally declared disaster area may be allowed more time to file: that includes taxpayers affected by Hurricane Dorian (more details here) and Tropical Storm Imelda (more details here).
The Internal Revenue Service (IRS) recommends that taxpayers file their tax returns electronically. The IRS says that e-File is “a faster and safer way of filing your taxes.” Of the 141,567,000 returns received by the IRS in the spring filing season, more than 90% were filed electronically.
You can e-file with a paid preparer or tax software, including FreeFile. FreeFile is available through the IRS website through October 15 at midnight ET. With FreeFile, commercial partners provide free tax software for about 100 million taxpayers with incomes of $66,000 or less to prepare and file returns electronically.
If you are expecting a tax refund, consider direct deposit. With direct deposit, the IRS can deposit your tax refund directly into as many as three accounts. For more on refunds in 2019, click here.
If instead, you expect to owe, don’t let that deter you from filing on time: You should file a timely return even if you can’t pay your tax bill. Penalties apply for both failure to file a return and failure to pay your tax, which means that you can reduce your penalty and interest burden by filing as soon as possible even if you can’t pay.
If you can’t pay what you owe by October 15, consider these options. If you’re ready to pay what you owe, here’s how to pay in full. Just don’t ignore your outstanding tax bills. Congress has become more aggressive with enforcement, authorizing private debt collectors and seizing passports for failure to pay.
Besides, it might not be as bad as you think: most taxpayers reported lower tax obligations in 2019, thanks to the Tax Cuts and Jobs Act (TCJA). And for those who might be surprised to find out that they owe not only taxes, but also underpayment penalties, the IRS has advised that some relief may be available. The IRS announced earlier this year that it is waiving the estimated tax penalty for those eligible taxpayers who filed their 2018 federal income tax returns and made payments of at least 80% of the tax shown on the return for the 2018 taxable year. Since the announcements were rolled out after some taxpayers filed their returns, there is an automatic waiver for any eligible taxpayer who filed earlier this year. However, if you are filing on extension, the IRS urges you to claim the waiver when you file. The penalty waiver should appear automatically if you use a tax software package. If you choose to file on paper, you’ll need to fill out form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts (downloads as a PDF) and attach it to your 2018 return.
And, of course, your tax professional would want me to remind you that you need not play chicken with the deadline: you don’t have to wait until October 15 to file. Get your tax documents to your professional or e-file your tax return as soon as possible – you don’t have much time left!