The 2018 IRS overhaul caused a lot of confusion among filers and tax professionals alike. The result? Many people didn't submit their returns back in April, but rather filed for extensions to buy themselves an extra six months.
Getting an extension is a smart move when you're missing key documentation that's needed to complete your return accurately, or when circumstances beyond your control -- say, an injury or illness -- render you preoccupied in close proximity to the original filing deadline. But if you got an extension back in April, you should know that your window for getting that return submitted is quickly closing.
In fact, you only have until Oct. 15 to get your return in to the IRS, and if you don't, you'll face a late filing penalty in the event you owe money on your taxes. And that penalty is a big one, equaling 5% of your unpaid tax debt per month or partial month it remains outstanding. That's 10 times the monthly penalty for paying your taxes late (though both penalties eventually cap out at 25% of your delinquent tax bill).
If you got a tax extension but have yet to tackle your 2018 return (which is the return you're supposed to file this calendar year), consider this your wakeup call to get moving. Otherwise, you'll risk missing that Oct. 15 deadline and paying the price after the fact.
You can file electronically -- and you should
One thing you definitely want to avoid when filing your taxes is a major error. A big mistake could cause your return to get rejected, or otherwise land you a spot on the dreaded IRS audit list. To avoid having that happen, file electronically. The error rate for paper returns is a whopping 21%, but it's less than 1% for electronically filed returns. At the same time, be sure to report all of your income, whether it's earnings from a side gig or gains from the sale of stocks you own.
Don't be afraid to get help
The tax code is complicated, and the changes that went into effect for the 2018 tax year made it all the more complex. If you're struggling to complete your tax return, don't hesitate to seek the assistance of a professional who can help you get it completed accurately and on time.
But don't wait. Tax prep service H&R Block reports that filers who don't complete their returns by the April deadline are more likely to need outside help, so don't expect to waltz into a tax professional's office and get your return done that afternoon. Rather, act quickly if you feel ill-equipped to handle it solo.
Finally, remember that while a tax extension gives you more time to submit your return, thereby helping you avoid a late filing penalty between April and October, it doesn't give you more time to pay any outstanding amounts you owe the IRS. If you do your taxes in the next couple of weeks and learn that you underpaid them in 2018, you will be liable for interest on that sum dating back to April, so it helps to prepare yourself for that possibility. On the other hand, you may not end up owing the IRS money at all, in which case the sooner you get your return done, the sooner you can expect your refund.