Filing for an extension automatically gives you until Oct. 15 to send in your return, but make sure you make the request by May 17, or you could get hit with a failure to file penalty, which applies if you owe tax. It’s a steep 5% of the amount owed for each month or partial month your return is late, up to a maximum of 25%. There is no penalty for failure to file if you don’t owe any tax. Remember, too, that an extension to file your tax return is not an extension to pay. Tax owed still needs to be paid by May 17, or you’ll face penalties and interest that start to accumulate after that date. You can find the extension form (Form 4868) on the Internal Revenue Service (IRS) website, in tax software packages or through your tax preparer. If necessary, submit an electronic payment or mail a payment with your form postmarked by May 17. You don’t have to give a reason for the extension, and it’s free to file it. Though an extension gives you more time, keep in mind a later return also means a later refund, if you are due one. And that’s not the only drawback to delaying the inevitable. Here are some things that can’t happen until you file your tax return:
Claiming through the recovery rebate credit any missing stimulus money you may have been eligible for in 2020 under President Joe Biden’s American Rescue Plan. If you didn’t get your stimulus checks, or you didn’t receive the right amount, the IRS needs up-to-date information to correct any mistakes. Collecting a “plus-up” stimulus payment. The stimulus checks the IRS sent out to taxpayers earlier this year were based on 2019 information unless you had already filed your 2020 tax return. If your 2020 return makes you eligible for a higher stimulus amount than you got, the IRS will send you the difference. Maximizing the child tax credit. The IRS intends to send families advance payments of up to half of this credit in monthly payments from July through December of this year. (They are advance payments because the credit applies to the tax year 2021.) If your 2020 income was lower than your 2019 income, or if you have additional dependents, you may be eligible for a higher credit, so it’s important for the IRS to have the most up-to-date information. The child tax credit for 2021 has been increased to a maximum of $3,000 per child for dependents 6 through 17, and $3,600 for dependents 5 and under. For 2020, it’s up to $2,000 per eligible child under 17.
