1.6 million Americans are about to get an average of $750 back from the IRS – could you be one of them?

1.6 million Americans are about to get an average of $750 back from the IRS – could you be one of them?

If you filed your 2019 or 2020 taxes late, then you may be eligible for a rebate on those late fees. More than a million Americans will get a rebate from the Internal Revenue Service (IRS) or have their late fines canceled.

The relief comes with a failure to file penalty, which can be very severe. The penalty grows at about 5% per month up to 25% of the unpaid taxes when you finally file. The IRS says that “most people and businesses” who filed “certain” late returns will be eligible.

Don’t lose

That means 1.6 million people could soon receive an average refund of $750, which will add up to more than $1.2 billion. But if you’re one of the 1.6 million, you’ll need to file your overdue taxes by the end of the month or you could lose out.

Many people missed the deadline

Let’s be honest, meeting deadlines during a pandemic lockdown has been difficult for many reasons.

“This will help many taxpayers who couldn’t meet with their accountants, who couldn’t file their taxes on time,” says Eileen Sherr, director of tax policy and advocacy for the American Institute of Certified Public Accountants (AICPA).

The relief applies to forms 1040 and 1120 series, which deal with income and corporate taxes. And Sherr says the move was necessary on the part of the IRS.

“We’ve been looking for it for years, since the beginning of the pandemic,” she says.

Sherr points out that a larger than average number of people failed to meet filing deadlines during the pandemic due to business closures and administrative backlogs.

“Sometimes it was just like a day or two late, a week or two late, but there were penalties that were assessed,” says Sherr.

But because the IRS only announced the relief in August, the AICPA is concerned that many people may not be able to meet the deadline. To that end, the organization sent a letter to the IRS requesting that the deadline to receive 2019 and 2020 taxes be extended past September 30 until the end of the year.

“Especially if you have taxpayers who are overseas, and they’re trying to file and get all their returns – it’s really hard to get everything in time to meet this short deadline,” says Sherr. “It would give more time for more people to voluntarily comply, if not, and for all the penalty issues to be resolved.”

How to make sure you get it

If you haven’t filed your 2019 or 2020 taxes yet, you’ll need to do so by September 30 to be eligible for relief.

But if you’ve already filed and paid a penalty, you shouldn’t need to do anything to get your refund. That said, if you’re expecting a refund, Sherr suggests checking your account on the IRS website.

However, keep in mind that it may take a few weeks to process the refund. And the forgiveness only applies if you filed late, not if you paid late.

“[The] The IRS said they were going to try to get the adjustment by the end of October… It could take a month or two. But I would say by the end of October, that account should be adjusted.”

If you don’t see something by then, Sherr suggests contacting the IRS.

And if you get a warning notice that you filed late and have to pay a late penalty but you believe you’re eligible for this exemption, you should contact the IRS, Sherr says.

“You can reply back that the ad applies and it should be relaxed.”

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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