Though the IRS teased in late June that it would potentially be moving the July 15 tax-filing deadline back even further, the agency has since made it clear that it is, in fact, sticking with that date. Of course, July 15 wasn't the original deadline to submit 2019 taxes. As is the case most years, this year's deadline was initially April 15, which is the standard deadline unless it falls on a weekend or coincides with a holiday. But once the COVID-19 crisis came to a head, the IRS recognized that filers would need more time to get their returns in order -- hence the mid-July deadline.
But now that deadline is rapidly approaching, and if you've yet to get started on last year's taxes, you may be thinking of asking for an extension. The process there is pretty simple: You fill out a form and the IRS grants you more time to submit your return. You don't need to come up with a creative excuse why you need that added time, either. That said, it pays to avoid getting a tax extension this year, and here are a couple of reasons why.
1. You may be due a refund, and an extension will delay it
Owing money to the IRS is pretty uncommon. In fact, most filers end up with a refund each year, and so far this year, the average refund has amounted to $2,767. If you ask for a tax extension because you're not ready with your return, you'll delay any refund you might be due. Given the number of people who are grappling with income loss or other financial stress right now, that's really the last thing you need.
2. You won't get more time to pay your tax bill
While a tax extension will give you extra time to submit your return to the IRS, it won't give you additional time to pay any taxes you're liable for. Now, let's say you owe the IRS $2,000 from 2019, only you don't find that out for months because you get an extension. What will happen is that you'll start accruing interest and penalties on that sum beginning on July 15 -- so if you don't finish your taxes until (for example) Sept. 15, you'll be that much more in the hole.
It pays to file on time
If you're thinking of delaying your tax return because you're worried about owing money from 2019, then unfortunately, that solution won't work. On the other hand, if you're thinking of getting an extension because you're overwhelmed by the idea of tackling your return, try sitting down and making a list of the various documents you'll need to get it done. You may find that you have most of them on hand already, and from there, it's just a matter of plugging that information into whatever software you use to file (assuming you're filing your taxes without the help of an accountant, and also that you're submitting your return electronically).
If you are going to request an extension, you'll need to fill out Form 4868 and submit it to the IRS by July 15. Just be aware that if you go this route, your tax return will then be due on Oct. 15. Normally, a tax extension grants you six extra months to submit a return. The same holds true this year, only that six-month time period dates back to the original April 15 deadline -- so don't make the mistake of thinking you'll get until January 2021 to submit your 2019 return.