Generally, taxpayers should file their tax return by the deadline even if they cannot pay the full amount due, but if you can't there are several options. Let's take a look at a few scenarios:
1. An individual taxpayer owes taxes, but can't pay in full by the deadline. If this is the case, file a tax return or request an extension of time to file by the May 17 deadline. If tax is owed and a return is not filed on time - or an extension is not requested - the taxpayer may face a failure-to-file penalty for not filing on time.
Taxpayers should remember that an extension of time to file is not an extension of time to pay. An extension gives taxpayers until October 15, 2021 to file their 2020 tax return, but taxes owed are still due May 17, 2021.
2. File an extension. To file an extension, taxpayers must do one of the following:
- File Form 4868, Application for Automatic Extension of Time, through their tax professional
- Submit an electronic payment with Direct Pay, Electronic Federal Tax Payment System or by debit, credit card or digital wallet and select Form 4868 or extension as the payment type.
3. Set up a payment plan as soon as possible. Taxpayers who owe money but cannot pay in full by May 17 don't have to wait for a tax bill to set up a payment plan. Instead, they can:
- Apply for a payment plan on IRS.gov; or
- Submit a payment plan request using Form 9465, Installment Agreement Request
4. Pay as much as possible by the May 17 due date. Whether filing a return or requesting an extension, taxpayers must pay their tax bill in full by the May deadline to avoid interest and penalties. People who do not pay their taxes on time will face a failure-to-pay penalty. The IRS has options for taxpayers who can't afford to pay taxes they owe.
Don't wait. If you need assistance filing a tax return for 2020, please call the office as soon as possible.
| About Author |
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Mr. Maker is a certified Public Accountant and serving the South Asian community since 1993.
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Website: https://taxprofessionalsnw.com/newsletter.php#6
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