Filing Federal Taxes and Getting Your Refund
Get answers about this year’s extended federal tax deadline, and explore ways to use your refund in the time of COVID-19
In response to the spread of COVID-19, the IRS moved federal income tax day to July 15, and the deadline is fast approaching.
If you need specific tax advice, consulting a tax professional or financial adviser is your best bet. But here are some answers to a few questions you may have about filing federal income tax returns. And if you receive a refund, there are also a few ideas about how you could use it to help yourself or others.
What’s Different About Filing Federal Taxes This Year?
One of the biggest changes for federal tax filers in 2020 is when taxes are due. Instead of April 15, like usual, this year’s filing deadline is July 15. The tax payment due date was also pushed back to July 15, with no additional penalties or interest charged.
The extensions apply to all federal taxpayers, including individuals and people who are self-employed. And because the extensions were automatic, no additional paperwork was required to qualify.
But deadlines aren’t the only thing affected by COVID-19. The pandemic has also disrupted other IRS functions, such as paper return processing centers, live telephone assistance and tax preparation sites. Despite it all, many IRS services are still available online.
How Do Tax Returns and Tax Refunds Work?
A federal tax return is filed to report income, expenses and other financial details to the U.S. government. Returns are also used to determine whether you owe the government taxes—or whether the government owes you a tax refund.
The forms used to file a return depend on each taxpayer’s situation. Not sure which forms apply to you? You could consult a tax professional. You can also use the IRS’s free filing tools to get help. Depending on your income, you may also be able to use the tools to get assistance with your state tax return.
But be aware that state policies and deadlines may not be the same as the federal government’s, and some state deadlines have already passed. You can learn more from your state’s tax agency.
How Should I File My Federal Taxes?
The IRS has recommended people file taxes electronically to help process returns, refunds and payments quicker.
If you’re planning to file a paper return, you should expect delays. That’s because the agency isn’t currently processing paper returns while it observes social distancing rules. And if you’ve already submitted a paper return, the IRS advises not to file a second version. Your return will be handled once processing centers reopen.
When Should I File My Federal Tax Return?
If you’ve been affected financially by the coronavirus, your federal tax refund may give you some temporary relief. If that’s the case, it may be wise to act now. Whether you need a financial boost or not, the IRS has said to file as soon as possible if you’re owed a refund.
Just be aware that not everyone is entitled to a tax refund. And the deadline to file is coming up soon. The IRS says the quickest way to get your refund is by filing electronically and choosing to receive your payment through direct deposit.
If you need time beyond July 15 to file, you can ask for an extension. If you’re approved, you’ll have until October 15. But be aware, extensions don’t apply to payments. They’re still due by July 15. If you’re late on your payment, you could be charged interest or other fees.
How Soon Will I Get My Tax Refund?
The IRS says most refunds are issued within 21 days of filing your tax return. But remember, not everyone receives a tax refund.
You can use the IRS’s Where’s My Refund tool to check the status of your refund. For the tool to work, you’ll need to provide your Social Security number or Individual Tax Identification Number, your filing status and your exact refund amount. If you don’t know all that information right off, you can look it up on your tax return.
How Can I Use My Refund?
For people facing financial uncertainty, tax refunds may offer some temporary relief and flexibility. If you’ve been lucky enough to avoid financial difficulties, you may be able to build your savings or help others in need. Here are a few ideas to consider while you wait for your refund:
1. Cover Bills and Expenses
You might use your tax refund to pay bills, buy groceries or cover other essentials. If you find you’re struggling to keep up with bills due to COVID-19, the Consumer Financial Protection Bureau (CFPB) suggests reaching out to your lenders or creditors to see whether there are hardship options available. Capital One® customers can learn more online or reach out directly about what resources are available.
2. Pay Down Debts
Using your tax refund to pay down debt today could help you save on interest in the long run. If you’re looking for guidance, the CFPB offers three steps to help you start paying down debt. It also has tips about how to handle a financial setback—whether it’s related to COVID-19 or not.
3. Build Your Savings
If you don’t have any urgent needs or debt, you might consider building your savings. You could deposit your tax refund into a savings account. Or you could use it to build an emergency fund. As the CFPB explains, having an emergency fund can help you recover quicker from unexpected expenses. And even a small fund could help you avoid long-lasting issues with debt.
4. Support Local Charities, Nonprofits or Businesses
If your finances are stable, you might also consider using your tax return to help others. You could donate to charities or nonprofits in your area. But be mindful of potential COVID-19 scams. Buying from local businesses or restaurants is another way to support people in your community. Your purchases could help them as they figure out how to cope with the effects of the coronavirus.
What If I Owe Taxes?
If you file your federal return and find you owe taxes, that payment is due July 15. If you need more time to pay, you can apply for a payment plan. But keep in mind, you may pay more in the end because of fees, interest and penalties. A tax professional may be able to provide more information.
The IRS’s short-term payment plans are designed to be paid within 120 days. Long-term plans offer more time to pay, but they also require additional fees. If you want to learn more, you can check out the IRS’s payment plan FAQ page. It has information about eligibility, applications, costs and more.
Making the Most of the Extended Federal Tax Deadline
Tax day comes later this year—just another thing the coronavirus has affected. But understanding the filing process and creating a plan for your refund may help you make the most of what you get back.
And don’t forget to check on tax deadlines for your state. You might be entitled to a state refund, too.
Government and private relief efforts vary by location and may have changed since this article was published. Consult a financial adviser or the relevant government agencies and private lenders for the most current information.
We hope you found this helpful. Our content is not intended to provide legal, investment or financial advice or to indicate that a particular Capital One product or service is available or right for you. For specific advice about your unique circumstances, consider talking with a qualified professional.