Filing season reminder: An extension to file is not an extension to pay taxes
For most individual taxpayers the tax filing and payment deadline was postponed to May 17, 2021. Those who need more time to file beyond the postponed date, can request an eextension to file.
Taxpayers must request an extension to file by May 17, or they may face a failure to file penalty. This extension gives them until October 15, 2021 to file their tax return. An extension to file is not an extension to pay. Taxes must be paid by May 17 to avoid penalties and interest on the amount owed after that date.
How to request an extension to file:
To get an extension to file, the IRS urges taxpayers to do one of the following:
- File Form 4868 through a tax professional, such as Loeffler Financial Group
- Submit an electronic payment with Direct Pay, Electronic Federal Tax Payment System or by debit, credit card or digital wallet and select Form 4868 or extension as the payment type.
An automatic extension of time to file will process when taxpayers pay all or part of their taxes electronically by the Monday, May 17 due date.
If you are still panicking to get all your documentations organized and ready for taxes to be prepared, contact Loeffler Financial Group to file an extension before the May 17th deadline.
The adoption process can be expensive. Fortunately, the adoption tax credit can help offset some those expenses Taxpayers who adopted or started the adoption process in 2020 should review the rules for this credit.
Here are some facts to help people understand the credit and if they can claim it when filing their taxes:
- The maximum adoption credit taxpayers can claim on their 2020 tax return is $14,300 per eligible child.
- There are income limits that could affect the amount of the credit
- Taxpayers should complete Form 8839, Qualified Adoption Expenses. They use this form to figure how much credit they can claim on their tax return.
- An eligible child must be younger than 18. If the adopted person is older, they must be physically or mentally unable to take care of themselves.
- This credit is non-refundable. This means the amount of the credit is limited to the taxpayer’s taxes due for 2020. Any credit leftover from their owed 2020 taxes can be carried forward for up to five years.
- Qualified expenses include:
- Reasonable and necessary adoption fees.
- Court costs and legal fees.
- Adoption related travel expenses like meals and lodging.
- Other expenses directly related to the legal adoption of an eligible child.
- If the taxpayer and someone other than a spouse each paid qualified adoption expenses to adopt the same child, the $14,300 credit must be divided between the two of them.
- Expenses may also qualify even if the taxpayer pays them before an eligible child is identified. For example, some future adoptive parents pay for a home study at the beginning of the adoption process. These parents can claim the fees as qualified adoption expenses.
- Qualified adoption expenses don’t include costs paid by a taxpayer to adopt their spouse’s child.
Have additional questions? We’re here to help! Contact Loeffler Financial Group today at 717-393-7366, or email info@loefflerfinancial.com with any questions you may have. Our tax experts and accountants can help break down the steps in order to one, understand the tax credit, and two see if the tax credit will benefit you for your 2020 tax return.