The extended May 17 tax filing deadline is here. What to know if you can’t file or pay

Personal finance

Getty Images

The May 17 extended tax filing deadline has arrived. Those who still aren’t ready may feel panicked, yet experts say there are options for people who aren’t prepared to file or pay.

More from Personal Finance:
2020 tax returns are due to the IRS on May 17. Here are some last-minute filing tips
Almost 2 million Americans will lose supplemental unemployment benefits in 16 states
New batch of $1,400 stimulus checks includes ‘plus-up’ and first-time payments

There are ways for last-minute filers to ask for a tax extension, said Jeremiah Barlow, head of family wealth services at Mercer Advisors in Santa Barbara, California. Filing for an extension pushes the deadline to Oct. 15.

They can submit Form 4868 through filing software, which may help estimate their tax balance.

Filers may also request more time through Free File, the IRS tax software for those with an adjusted gross income below $72,000. 

However, filing an extension won’t prolong the deadline to pay.

“We tell our clients that they need to pay as much as they can, even if it’s not much,” Barlow said.

Penalties for tax balances will start to accrue after May 17. The failure-to-pay penalty is 0.5% of the unpaid taxes per month, with a cap of 25%.

Those who can’t afford to pay now may apply for a payment plan online, by phone or in person. Depending on the plan, filers may owe a set-up fee, along with accrued penalties.

However, the IRS may be willing to offer penalty relief in some cases.

Filers may consider adjusting their withholdings to avoid trouble next year, Barlow suggests, and with changing tax laws, it may be smart to work with a professional.  

So far, the IRS has received more than 126 million individual tax returns and has processed nearly 116 million, according to reporting through May 7. The agency has doled out almost 85 million tax refunds, with an average payment of $2,863.

While the May 17 tax deadline applies to federal returns, state filing cutoffs may vary. The IRS urges filers to check with state tax agencies for deadlines and the rules for filing an extension. 

Articles You May Like

Small music venues fight to keep prices affordable as inflation eats into profits
UAW launches union campaigns at Tesla, 12 other automakers in the U.S.
Watch CNBC’s lookback at Charlie Munger’s life and relationship with Warren Buffett
401(k) balances are down, and ‘last resort’ hardship withdrawals are up
This tax-smart charitable donation strategy is like ‘hitting two birds with one stone,’ advisor says