IRS Extensions
For individuals, the IRS allows an extension of time to file your Form 1040 tax return, but does not (usually) allow an extension of time to pay your tax due on the return. As we know, 2020 has been an exceptional year, and the IRS gave all individual taxpayers an automatic extension of time and an extension of time to pay their tax due from April 15, 2020 until July 15, 2020. This means that taxpayers did not have to request an extension to benefit from this additional time.
However, there is also the traditional extension of time to file a tax return that extends the filing deadline, but not the payment deadline, to October 15, 2020. In order to receive this extension of time to file for the tax year 2019, an individual needed to file a Form 4868 with the IRS on or before July 15, 2020. The purpose of requesting an extension of time to file is to prevent the IRS from adding the “failure to timely file” a tax return to your amount due when you do file the tax return. I will be writing future blog posts about each of the possible penalties that the IRS can assess.
Even if you cannot pay your balance due in full, you should try to pay as much as you can when you file the return or before you file, if you requested the extension of time to file until October 15. You can make a payment to the IRS at any time on the IRS website. If you cannot pay the balance due on your tax return in full when you file your tax return, please contact me for a free consultation to discuss your payment alternatives.
Whether or not you requested an extension of time to file your tax return, you should still file your 2019 tax return prior to October 15 and pay the tax due with the return as soon as possible to reduce the accrual of interest and penalties. Although you can file the tax return by mail at any time after October 15, the IRS will close electronic filing for 2019 tax returns some time in November of 2020. This means that if you or your accountant are using tax preparation software for your 2019 tax return, you will only be able to electronically file your return using this software prior to November 2020. Most people prefer to electronically file their tax return because you can receive your refund by direct deposit faster than if you mail your tax return to the IRS. The IRS does have delays in processing tax returns that are filed by mail due to the limited operations at the IRS offices so electronically filing will speed up your return and refund processing.