CLEVELAND — April 15 is usually when your taxes are due, but the deadline to file both federal and state taxes this year has been extended to May 17 due to the pandemic.
However, financial experts say even with that extension, fewer people have filed their taxes so far this year compared to last. Many are putting off dealing with it after the financial impact of the coronavirus, but there is help available, including ways to get the IRS to forgive much of your tax bill.
This year, the American Rescue Plan made changes to the tax code after the IRS started accepting returns. Those changes meant many people had to hold off on filing returns, including those who lost their jobs, claimed unemployment, or dipped into their retirement funds.
“If you did take money out of your IRA or 401K and you're under fifty-nine and a half, normally, that would mean we'd have a 10% penalty. We'd have to pay the taxes on it,” said financial advisor Andrew Rafal.
If you haven’t filed yet, tax experts say the sooner the better.
“Procrastination is everyone's favorite thing, so what we preach is don't wait to the twenty-third hour or so, in this case to May 17,” Rafal said.
When you can’t pay, you will be hit with some interests and penalties, but if you don’t file at all, the IRS will penalize you up to 5% each month for the first five months you’re late. Another reason to file, even if you can’t pay, is it opens up access to IRS programs that can help you.
The IRS has a program called “first-time penalty abatement,” and they will wipe the penalties away.
“So file now and if you don't have the money to pay the tax that to do, you can work to pay that in future months,” Rafal said.
To get help and talk to a tax professional about these programs, you can access a list of free tax clinics by going directly to the IRS website and click on the “taxpayer advocates services” tab.
Locally, you can find help from the volunteer income tax assistance program.
“I know there's a lot of good places there that will help people. Even financial firms and tax firms will sit down and do some pro bono work,” Rafal said. “So, I think from that standpoint is just research. Do some Googling.”
If you can’t submit your return to the IRS by the May 17 deadline, it’s easy to file for an extension giving you until October 15 to file.
“This stuff is complex, it’s always changing and last year and this year, it’s never been more complex with all of these changes,” Rafal said.
Ohio’s tax deadline extension will waive the penalty and interest on payments made during the extension period until May 17. For local taxes, most cities have pushed back their deadlines to May 17 as well, including those who file with the Regional Income Tax Agency, or RITA.
