Yes, No, Maybe
This month I have a little bad news and some less bad news that might end up being good news. Sounds confusing, right? I have to say that’s par for the course much of the time when dealing with the governing powers that be and the IRS.
It’s A Strong “Yes” To A Third Stimulus Check
It seems as though a third stimulus payment will be approved by the President very soon – in fact, it may already be approved by the time this piece is posted. That’s the good news.
It’s “No” To Tax Filing Extension
Here we are a year into the pandemic and millions of taxpayers are in an even tighter bind than they were this time last year. On top of that there are PPP loans, stimulus payments, unemployment issues and more confronting so many taxpayers. Yet, the bad news is that the IRS will not extend the tax filing and payment deadline. (The only states that get an extension are Texas and Oklahoma due to the winter storms.) So, despite the confusion and the desperation so many taxpayers are experiencing, you’re not getting any more time to figure it out or have your accountant or tax preparer figure it out. And believe me, the American Institute of CPAs (AICPA) is practically on its knees begging the IRS for an extension. The answer keeps coming back as a resounding “NO.”
Anyone can file for an extension with the IRS. If you do file for an extension you can delay your filing deadline to October 15, 2021. However, if you owe taxes, to avoid fees and penalties you will need to pay what you owe by April 15, 2021.
*Update: 04/01/21 Since, this article was posted, the IRS announced there WILL be an extension for individual filing until May 17, 2021.
The Maybe Part Of The Equation
So here’s the pickle for taxpayers. Miss your tax filing and payment deadline and the IRS immediately begins adding interest and fines to what you owe them. But, they’ve also said they don’t know when they’ll be able to get the stimulus checks out because they are in the middle of tax season. So, maybe you’ll get the money the government is promising, but you probably won’t get it in time to pay your taxes on time.
Damned If You Do, Damned If You Don’t
The way I see it, taxpayers are in a damned if you do, damned if you don’t situation this year.
No matter what, you must file, whether you are in a position to pay your taxes on time or not. The fact of the matter is that it’s always better to file your tax return and work out the details later. And, who knows, maybe the IRS will get those desperately needed stimulus payments out in time to at least keep your nose above the water line.
If you received a PPP loan last year and don’t have any idea of how to handle it on your tax return, give us a call. We can help you steer clear of or get out of the most confusing IRS issues.