Some Tax-Filers Will Get $750 Back From the IRS. Will You Be One of Them?
- More than 1.6 million tax filers submitted their returns late during the pandemic.
- Although late filing normally triggers a penalty, the IRS is waiving those fees and refunding those who already paid them.
There could be some money coming your way.
If you don't owe the IRS any money and are late filing your tax return, there's generally nothing to worry about. Granted, you'll delay your refund, which means waiting longer for that money to hit your bank account. But when you're in that boat, there's no penalty for being late with your taxes.
The opposite holds true in situations where you owe the IRS money, though. If you're late filing a tax return and owe the agency money, you'll face costly penalties if you don't submit that return by the filing deadline (or request an extension and submit your return by the new deadline you lock in).
During the pandemic, more than 1.6 million tax-filers submitted their returns late. And that's in spite of the fact that the IRS moved the tax-filing deadline back two months to mid-July in 2020.
Given that vaccines weren't available during the early months of the COVID-19 outbreak, and many people were too scared to leave their homes to so much as buy groceries, it's easy to see why filing taxes fell by the wayside. But unfortunately, people who were late with their taxes during the pandemic may have gotten penalized.
If that happened to you, here's some good news. The IRS has decided to waive penalties for late tax returns for the 2019 and 2020 tax years. And so if you already paid a penalty, you may have some money coming your way.
Giving taxpayers a break
Submitting a tax return late when you owe money to the IRS could have serious consequences -- namely, you could get stuck with a failure-to-file penalty worth up to 25% of the amount of tax you owe. Now, the IRS has agreed to waive that penalty for 2019 and 2020 returns.
Those who paid a penalty already will see it refunded to them automatically -- no action needs to be taken. Meanwhile, filers who have not yet submitted their 2019 or 2020 tax returns should do so by Sept. 30 of this year. Those who meet that deadline won't have to pay a failure-to-file penalty to begin with.
All told, this concession on the part of the IRS should save the average taxpayer who was late with a 2019 or 2020 return $750. However, some filers may get more or less money, depending on their specific tax bills.
Don't be late with your tax return
The fact that the IRS is throwing taxpayers a bone due to pandemic-related circumstances is a good thing. But don't expect that sort of leniency going forward.
The IRS doesn't tend to forgo revenue so easily, so in future tax years, it's unlikely to waive penalties for those who file their returns late. As such, it pays to get moving on your taxes early so you're in a solid position to submit your return every year by the due date in mid-April.
You should also know that if you can't get your taxes done by the original April filing deadline, you can always request a tax extension. You don't need a specific reason to ask for more time to get your taxes done; all you need to do is fill out the right form, and the IRS will give you an additional six months to file your return.
Getting a tax extension won't give you more time to pay any taxes you owe, so you'll still incur interest and penalties on the sum you're supposed to submit to the IRS. But you'll at least avoid the dreaded failure-to-file penalty, provided you get your taxes done by your new mid-October deadline.
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