Did you get an extension on your taxes this year? Here’s what you need to know about the Oct. 17 deadline
“Everybody is still behind,” said Darren Neuschwander, an accountant and chairman of the American Institute of CPAs’ individual and self-employed tax committee. “I know the IRS is encouraging us to file the returns, but we don’t have the information to complete them.”for 2019 and 2020 tax year returns, but tax experts say that similar penalty relief is unlikely for the nearly 12% of taxpayers due to file on extension for the 2021 tax year by next month.
Importantly, it is only an extension to file, not an extension to pay any taxes due. You had to do your best to pay in 100% of what you owe by April 18 or the IRS will likely charge penalties that can reach up to 25% of the total unpaid taxes, with some exceptions.“The tax laws are changing so much, I tell most of my clients, ‘I’m putting you on extension,’” said John Schultz, a CPA and chairman of the CalCPA’s state taxation committee.
The IRS backlog of 8.2 million unprocessed individual returns, including tax year 2021 and earlier returns, is another factor affecting this year’s filings. Mr. Neuschwander says he has several clients whose 2020 returns haven’t been processed yet. Those returns showed loss carry-overs or overpayments, so he has been reluctant to file the 2021 tax returns because the IRS system could show a mismatch. “It’s a Catch-22,” he said.