2020 Tax Deadlines and Why You Should File Even if You Can’t Pay

2020 Tax Deadlines and Why You Should File Even if You Can’t Pay

As you may already have heard, 2020 tax deadlines have changed to July 15^th 2020 for filing and paying federal income tax. Something I hear a lot from clients, specially because of the financial hardship with COVID-19, is their inability to pay their taxes. And they want to delay filing their taxes for that reason. The reality is, the penalties of not filing is more than not paying.

Who is Affected by the July 15 Deadline?
All individuals and businesses who file and pay Federal income tax are given until July 15th 2020 to file and pay their tax return. Any penalties and interest on unpaid balances won’t accrue until July 16, 2020. While it may be helpful to take advantage of the extended deadline, the IRS encourages those who are owed a refund to file as quickly as they can. For individuals who cannot file their taxes by July 15, they can request a three-month extension to file (until October 15, 2020). Businesses that cannot file by the deadline can request a two-month extension (September 15, 2020).

The Penalty for Filing Late is Greater than Paying Late

If you don’t think you can pay your taxes by the July 15 deadline, you may believe that it won’t matter if you file either. However, the penalties for failing to file and pay on time are not the same. The penalty for failing to file on time is more than the penalty for failing to pay, at about 5 percent of the unpaid taxes for each month the tax return hasn’t been filed. The penalty for not paying is typically .5 to 1 percent of the unpaid taxes for each month starting after the accrue date. As you can see, it is far more in your best interest to file your taxes by July 15, even if you cannot pay them. If you are able to pay a portion of owed taxes, you can avoid failing-to-pay penalties and interest.

If you need any help getting your tax return filed by the July 15 deadline, reach out to our team today. We can help you not only with filing your return on time and correctly, but help you receive any applicable deductions, adjustments, and exemptions. It saves to file on time with an experienced CPA in your corner!