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The extended tax deadline is fast approaching for 19 million Americans. What to know if you still haven’t filed

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Experts say that filers should prepare for the Oct. 17 tax extension.

An estimated 19,000,000 American taxpayers filed extensions for their 2021 tax returns, a record high. according to the IRS.

Kevin Brady, a certified Financial Planner and vice president of Wealthspire Advisors New York said that tax professionals have faced many obstacles, including deadline changes, new Covid-related legislation, and other deadline changes.

He said that filing for an extension is more necessary when you consider the fact that there is less staff in tax prep and accounting firms, and the complexity of the tax code.

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The Paycheck Protection Program, and the employee retention credit, which were enacted to protect businesses during the pandemic have added “significant amounts of complexity and uncertainty,” said Rob Baner (a CPA and tax advisor at The Planning Center, Moline, Illinois).

Despite these challenges taxpayers are fast approaching the deadline for 2021. 

“The best advice that we can give is to file your return as soon as you can,” said CFP Diahann Lassus of Peapack Private Wealth Management, New Providence, New Jersey. She is also a member CNBC’s Financial Advisor Council.

How to get organized before Oct. 17 deadline

Experts estimate that there are only about four weeks until the deadline. It’s crucial to get organized, communicate quickly with your tax preparer, and provide information as soon possible.

Baner stated, “Don’t procrastinate,” noting that some tax documents might take longer to process. He suggested that you keep a folder to store all paperwork.

Tax professionals are grappling with new Schedule K-2 or K-3 forms for international tax, which may not arrive until Sept. 15-31. These forms are compatible with Schedule K-1 forms that can be used for partnerships, trusts, estates, and S-corporations.

Electronic filing is the best.

Diahann Lassus

Managing principal at Peapack Private Wealth Management

You may get a refund faster if you e-file and choose direct deposit. According to the IRS most errors-free returns are processed in less that 21 days.  

Lassus said that electronic filing was the most efficient. 

Tips for Oct. 17 tax extension deadline

1. Don’t procrastinate.

2. Communicate early and often.

3. Send it electronically

4. Pay your tax balance.

5. Reconcile Covid Relief.

Baner explained that interest and a late payment penalty will be assessed if your balance is not paid by April 18.

According to the IRS, interest rates for underpayments rise to 6% from just 5% on October 1. They compound daily. You may also owe a late filing penalty if you miss the tax deadline extension.

Lassus said that there is no penalty for failing to file if you are entitled a refund. However you must file within three-years to claim it. 

It’s important to file accurately in order to avoid delays caused by the IRS digging through unprocessed returns. 

Baner suggested that filing Covid relief, such a stimulus and advance child tax credit payments should be double-checked before you file. Baner encouraged filers to compare IRS letters to bank statements.

Source: CNBC

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