Taxes 2021: Here’s how to get a filing extension in 2021. The tax deadline is here and, for many, this is your last chance to get an extension to file your return and avoid penalties and interest.
If you can’t file your taxes by May 17, you can request an extension until October 15 for any reason. Anyone can request an extension as long as they file the needed documents and pay their estimated tax bill before the deadline, according to the Internal Revenue Service.
Filing for an extension won’t postpone the payment of the taxes you owe to the IRS. If you don’t pay by May 17, you may incur penalty fees and interest on your unpaid balance after tax day. Penalties and interest will accrue on a monthly basis until the taxes you owe are paid in full to the agency.
If you’re expecting a tax refund, you must file your return first. It takes the IRS approximately 6 weeks to process a past due tax return.
Here’s what else you need to know.
To file for an extension, you have to submit Form 4868 either electronically or as a paper form. You have to estimate your 2020 tax liability and pay the amount due.
Taxpayers can use Free File to electronically request the extension, which may direct them to a tax-filing program like TurboTax Extension that can help them calculate what they owe in taxes. If you file a paper form for an extension, the form should be postmarked on or before May 17 to be eligible for the extension.
If you fail to file your taxes before May 17 and don’t request an extension, you’ll have to pay a late-filing penalty, which is usually 5% of the amount due for each month your return is late with the maximum penalty at 25%. If you can show a reasonable cause for the delay, the penalty can be waived. If so a statement should be attached to your return.
Additionally, the late-payment penalty for not paying your taxes is usually half of 1% per month of any tax that you don’t pay by the tax deadline with the maximum penalty you can owe being 25%. If you have a reasonable explanation for the delay and attach a statement to your return, you might now owe the penalty.
May 17 is your last chance to file Form 1127 and get an extension for paying your taxes.
In order to get an extension, you need to provide a complete statement demonstrating you were unable to pay your taxes due to “undue hardship” by showing a substantial financial loss. One example is selling a property at a sacrifice price.
Extensions to pay are usually limited to six months.
The IRS offers numerous options to pay your taxes. You can pay via direct deposit from your checking or savings account.
If you use tax preparation software or a tax professional to file your taxes, you can use an Electronic Funds Withdrawal (EFW) from your bank account when you e-file your return.
You can also use your debit or credit card. Additional fees may apply for those payments. Paying by check or money order is also an option along with paying cash at retail partners or at one of the IRS Taxpayer Assistance Centers (TACs).
For many people, filing taxes shouldn’t cost money.
Low- and moderate-income Americans — especially those who don’t usually file a tax return — can use the Free File program from the Internal Revenue Service to e-file their federal tax returns and get their refunds for free.
Here’s what to know.
Free File gives access to major tax preparation software at no cost to individuals who earn $72,000 or less. Those experiencing homelessness, students on their own, low-and moderate-income families and others can access Free File. Already, over 2.96 million individuals and couples have used this online service this year to file their taxes.
Free File can be accessed by computer or similar device. If you don’t have a computer, you can also access by mobile phone.
The IRS distributed two rounds of stimulus checks to eligible people that you can claim on your 2020 federal tax returns if you didn’t receive a payment or you didn’t get the full amount. Those payments will be added to your tax refund. You can claim those payments as the Recovery Rebate Credit.
The first stimulus check was worth up to $1,200 per eligible person and $500 per qualifying child. The second payment was up to $600 per person and $600 per child.
Additionally, there are two other tax benefits — the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) — that could help put money in the pockets of American families. Those workers who were laid off in 2020 still qualify for these credits under a special pandemic rule, the IRS said. That’s because they can use either their 2019 income to calculate these credits.
The IRS encourage everyone to look into Free File as option, but especially the following people who may not realize the full benefits. This includes:
Visit the IRS Free File page here that shows the major tax software providers that offer free online services as part of a 19-year partnership with the IRS. There are nine products in English and one in Spanish. Additionally, MilTax —available at no cost from the Department of Defense — provides similar online tax-preparation services to military members.
Because Free File returns are filed electronically, your tax returns are processed faster than paper ones. If you choose direct deposit for you tax refund, you’ll get that faster than waiting for a mailed check.
This year’s federal tax filing deadline for individuals is Monday, May 17.