money Tax expert: Extension to October 'does not defer your payment deadline'
If the extra three months to do your taxes wasn’t enough — because the first half 2020 has been a blur — there’s still time to “buy yourself a couple more months” as the extended July 15 deadline looms, one expert said.
“If you’re an individual, you can file an extension by July 15, which will give you until October 15 to file your tax return,” said Todd Simmens, partner at BDO USA, told Yahoo Finance. But “it does not defer your payment deadline.”
If you don’t pay what you owe by July 15, you are vulnerable to penalties and interest that start to accrue on July 16, 2020, Simmens warned. The Internal Revenue Service in March extended the deadline to file returns and pay any owed taxes from April 15 to July 15 due to the coronavirus pandemic.
To file for an extension, you must complete Form 4868 that can be found at IRS.gov, through a tax professional, or tax preparation software.
Is my stimulus check taxable?
No, your stimulus check is not taxable income, Simmens said.
Your stimulus check was based on the income you reported, so it’s not considered additional income in the eyes of the IRS, he explained.
If you are eligible for a stimulus check but haven’t received one yet, it could be because the IRS is still deliberating and waiting for your financials from 2019 to make its determination, Simmens said.
“There can be cases that you didn't make it based on ‘18 [returns] but you might be based on ‘19 even ‘20 [tax returns],” Simmens said, “so that could be an impact as well.”
What if I can’t pay my tax bill?
The IRS is aware that Americans are financially struggling through the pandemic and temporarily suspended many of its collection activities in March.
Due to the pandemic, taxpayers who otherwise would be subject to liens and levies and other collection acts have been relieved through July 15, 2020.
There are also programs for taxpayers to defer taxes, use a payment plan, or settle for less than what you owe if the financial burden is severe.
If you know that paying your tax liability is going to be a hardship for you in the future, Simmens suggested to “contact the IRS or a [tax] practitioner early” to prevent collection notices from being sent.
Stephanie is a reporter for Yahoo Money and Cashay, a new personal finance website. Follow her on Twitter @SJAsymkos.
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