The extended deadline for filing tax returns is October 17. Here’s what applicants need to know
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With about a month left until the October 17 tax filing deadline is extended, experts say tax filers need to prepare, especially for more complex returns.
An estimated record 19 million U.S. taxpayers filed a deferral for their 2021 returns. according to the tax office.
Kevin Brady, a certified financial planner and vice president of Wealthspire Advisors in New York, said tax professionals are facing many challenges, including changing deadlines and new legislation related to Covid-19.
“When you combine these facts with the shortage of staff in tax and accounting firms and the usual complexity of the tax code, applying for an extension becomes more necessary,” he said.
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For example, the Paycheck Protection Program and Employee Retention Credit adopted for businesses during the pandemic added “significant complexity and uncertainty,” said Rob Baner, CPA and tax advisor at the Planning Center in Moline, Illinois.
Despite these challenges, taxpayers are fast approaching the 2021 deadline.
“The best advice we can give is to file as soon as possible,” Diahann Lassus, managing director of Peapack Private Wealth Management in New Providence, NJ, who is also a member of the CNBC Council of Financial Advisers, told CFP.
How to get organized before the October 17th deadline
Experts say that there are about four weeks left until October 17, so it is very important to get organized, contact your tax officer and provide information as soon as possible.
“Don’t delay,” Banner said, noting that some tax filings could take longer to process. He suggested keeping a folder for all documents.
For example, tax professionals are struggling with new forms of Schedules K-2 and K-3 for international taxes, which may not appear until September 15 or 30. These forms come with the K-1 Appendices forms for partnerships, S-Corporations. , trusts and estates.
Electronic documentation is the most efficient.
Managing Director Peapack Private Wealth Management
“Electronic registration is the most efficient,” Lassus said.
If you’re expecting a refund, you can get it faster by filing electronically and choosing direct deposit, according to the IRS, with most error-free returns processed in less than 21 days.
Tips for the October 17 Tax Extension Deadline
1. Don’t procrastinate.
2. Communicate early and often.
3. File in electronic form.
4. Pay your tax balance.
5. Agree Covid-19 assistance.
However, if you have not paid the balance before The April 18 deadline, you will owe interest and a late fee, which depends on the type of return and the length of time after the deadline, Baner explained.
Underpayment interest rates jumped to 6% from 5% on Oct. 1, according to the IRS, and are compounded daily. And if you miss the tax deadline extension, you can pay a late filing penalty.
“The only good news here is that there is no penalty for non-documentation if you are due a refund, but you must apply within three years to claim it,” Lassus said.
As the IRS is still digging through the backlog of unprocessed returns, it’s important to file properly to avoid unnecessary delays in processing.
You should double-check Covid-19 relief such as stimulus and child tax credit advance payments before filing, Baner suggested, urging applicants to compare IRS letters with bank statements.