With so many Americans focused on the COVID-19 crisis, it's easy to see how taxes may be falling by the wayside. If you've yet to submit your 2019 return, here are a few things you should know.
1. Refunds are taking longer
The IRS typically issues refunds for electronically filed tax returns within three weeks of receipt, and signing up to receive a refund via direct deposit can sometimes speed up the process even more. But as my colleague Dan Caplinger reported earlier this season, electronically filed returns have also seen their share of refund delays. So if you want your money as quickly as possible, don't wait until the July 15 tax deadline to submit your return to the IRS.
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2. This is not the year to file on paper
Paper tax returns have their drawbacks compared to electronic returns. For one thing, with a paper return, you're more likely to make an error that results in your taxes getting rejected or audited.
Secondly, paper returns take longer to process even during normal times. In fact, the average turnaround for refunds associated with paper returns is six weeks from the date the IRS receives them. That's twice the amount of time it takes to process electronically filed returns under normal circumstances.
Now, here's the kicker: Because of the ongoing pandemic, the IRS stated earlier this year that it was unable to process paper returns. So if you insist on filing on paper, you may be subject to months of delays in getting any refund you're due. And if you're struggling financially because of the COVID-19 crisis, that's not a delay you can afford.
3. You can still get an extension if you need more time
Normally, taxes are due on April 15 each year unless that date happens to coincide with a weekend or holiday. Realizing that most Americans would not be in a position to get their taxes done by April 15 this year, the IRS extended that deadline to July 15 earlier in the pandemic.
But what if you're still unable to get your taxes done within the next month and change? It could be that you're still missing paperwork, your accountant is backed up, or you just don't have the head space to deal with a return when you're worried about losing your job or finding a new one. If that's the case, even though all taxpayers got more time to submit their returns this year, you're still allowed to request a tax extension. You must file for that extension by July 15, at which point you'll be given until Oct. 15 to submit your return. Keep in mind that while an extension usually buys you an extra six months, this year, you get only six months beyond the original April 15 deadline.
Filing taxes can be a cumbersome process in the best of times, and during a pandemic, it's a task you may not want to deal with. No matter when you decide to sit down and tackle your return, be sure to keep the above points in mind to avoid unpleasant surprises.
