What to Know About the Tax Extension Deadline on October 15 (Ep. 46 Rebroadcast)

(Image credit: Getty Images)

By Sandra Block, David Muhlbaum, Ryan Ermey

published 29 September 2020

Ryan Ermey: Hi, folks. In case you missed it, last week's show episode 96 was my last episode as host of Your Money's Worth. But that doesn't mean the show is coming to an end. Replacing me is new co-host, Kiplinger.com senior online editor David Muhlbaum. Say hello to the people, Dave.

David Muhlbaum: Hello, all you beautiful people. Well, these are some pretty big shoes I'm stepping into. Ryan has done a spectacular job of connecting you -- our listeners -- with both the insights of our reporting and the people who do it. Not to mention the guests. I'm going to do my best to continue his work and look for Sandy and me to talk about the fall travel season next week.

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Ryan Ermey: Tax day is next week -- if you filed for an extension, that is. Kiplinger.com tax editor Rocky Mengle joins the show to break down the rules around extensions and what you need to know before filing in our main segment. On today's show, Kiplinger car guru David Muhlbaum fills in for Sandy for a discussion on preparing your car and home for winter. And we crack into another category's worth of financial Jeopardy questions. That's all ahead on this episode of Your Money's Worth. Stick around.

Ryan Ermey: So the talking points that Sandy and I wanted to hit in the beginning of the show today were on winterizing your home and car, which is funny to me as we record today... Washington D.C. is oh, about a thousand degrees outside. But it is the season that you should start thinking about preparing for colder weather. And since I don't have a car, thought that you would be the right guy to talk about the automotive aspects of this since you are in fact Kiplinger's car guy, the author of our DriveTime column. So I imagine the big thing when it comes to your car for winter is tires.

David Muhlbaum: But the emergency blanket upfront is my, sort of argument that everyone should have this. And the point is this, if you're in an accident, if you go off the road somewhere in an accident that's bad enough that you're perhaps trapped in that vehicle in snowy weather and nobody's... and your phone isn't working, you might not be able to get out of the car and get back to the trunk to where the real stuff is.

Ryan Ermey: So all excellent advice. I want to run... You know, it's funny I'm not a car... I don't have a car and I don't really... I mean I live in a house, but I'm not a homeowner, but I do have some advice for winterizing your home big and small. One is that you need to get your heater inspected and for about $80 to $100 dollars a technician will come inspect the furnace and make sure the heat pump and the system is clean and in good repair and can measure carbon monoxide leakage, is something that's worth the money. And if you act soon -- and this is why we give this kind of advice in October -- it'll keep you from having to be the 200th person in line and you're going to want to make sure that the person is, you know, super legit. So I would go through The Air Conditioning Contractors of America.

Ryan Ermey: Yeah, so if you have them in a clockwise direction, after you turn on your heat it'll produce an updraft and push warm, heated air down into your room, which should let you be able to set your thermostat lower. You're going to want to prevent ice dams and this can be part of a larger home energy audit. Ice dams can cause melted water to back up and flow into your house. That's bad news.

Ryan Ermey: Well, yes, and not only that but make sure the gutters that go down into the drain pipes, that they're going a couple of feet away from the house as well. I'm making hand motions to you as the people aren't going to be able to see, but you know, a couple of feet away from the house. You're going to want to caulk your windows and doors if there's a gap in a window or doorframe that's bigger than a nickel. You're going to want to apply some exterior caulk.

David Muhlbaum: Yeah. Well, so sometimes you have a window that doesn't fit quite right or you don't have the money to replace right now, but it leaks and during the winter you're like, "I can live without opening or closing that window." There's a product called rope caulk, which is like rope, like R-O-P-E, and basically it's a sort of temporary caulk that you can put little strips in where there's a leak and then come spring you're like, "I want that window back."

Ryan Ermey: I love that. And then the last thing I wanted to mention, and I love this because, I don't know, it's like, kind of probably just reminds me of Mary Poppins is that you'd call the chimney sweep. I don't know anyone who employs a chimney sweep, but if you have a chimney and you have a fireplace and you like to light the log and everything, you're going to want to make sure that you're not going to have a chimney fire or some kind of carbon monoxide issue. So do it now. Search for a sweep from the Chimney Safety Institute of America. You'll probably pay $50 to $90 bucks for an inspection, $100 to $300 bucks for cleaning. And you know, you can light the yule log, maybe serve the eggnog and...

Rocky Mengle: Well you had to have requested an extension back in the spring, before April 15th, in order for this October 15th extended deadline to apply. And there are two ways that you can request an extension, or you should have done this. Either file form 4868. You could have filed that either on paper return or electronically, or make an electronic tax payment for part of what you expected to owe. And then that triggers an extension and that's it. You don't have to have a good reason or anything like that. The IRS says fine, just file by October 15.

Rocky Mengle: Right. Then they'll typically say, "Okay, if you have a filing or payment deadline coming up between this date and that date,we'll push it back." So some people who were victims of natural disasters could have a filing and payment date after October 15th. Military personnel, they also have some special provisions that allow them to file after October 15th. Particularly if they are in or were in a combat zone. There's a whole set of rules and that can be pushed out, you know, additional six months or even three and a half months after that. Or if they are stationed overseas, there are provisions that could push it back to mid December. And actually people living abroad who aren't in the military can also take advantage of those rules to push it back to mid December with IRS permission.

Ryan Ermey: Right. So as you've mentioned, if you file late or if you pay late the wrong way, you're going to end up paying interest and penalties. But let's say some of our readers have done this the right way, they've filed for their extension properly, what are the forms they should, or documents or what have you that they should be getting together now as they prepare to file by the extended deadline?

Rocky Mengle: Okay. Well it's basically the same as if you were filing on April 15th. So you want a copy of your previous year's tax return. Particularly if you're filing electronically, you're going to need information off of that to be able to do the e-filing. You want to collect your receipts for any expenses that you plan to take deductions for, charitable contributions, that sort of thing. You want your W-2 forms from your employers. If you had some gambling winnings, if you're fortunate enough to...

Rocky Mengle: 1099 forms. There are all kinds of 1099 forms for different types of income. If you're a freelancer for instance, you should be getting a 1099-miscellaneous, 1099-R for retirement plan distributions, there's 1099 for dividend income, interest income, et cetera. 1098 forms for your mortgage interest payments. And if you have student loan interest you can look for a 1098-E. Social security numbers, you want to make sure you have those available for yourself, your spouse, your dependents.

Rocky Mengle: Yeah, they're two tax tips here that are tied to the October 15th deadline. First, as you probably know, or listeners probably know that there's a limit to the amount of money you can contribute to an IRA each year and in 2018 that was a $5,500 for most people. If you're over 50 you can bump that up $1,000 to 6,500. If you contributed over those amounts in 2018 you have until this October 15th to withdraw that money and any earnings on that money in order to avoid a 6% penalty from the IRS.

Ryan Ermey: And that sort of brings me to the last thing I wanted to mention, which is maybe you screwed up this year and you didn't get the extension when you really needed one. What are some good reasons going into our next deadline here, the April deadline, what are some good reasons why someone might want to delay filing their tax return? And conversely, why might someone want to avoid doing that?

Rocky Mengle: You know, you just want more time to figure things out. And this year, you know, with the new tax laws kind of kicking in I think a lot of people probably took an extension earlier this year just for that purpose because they wanted to get a better feel for the new tax landscape. So that's one. Let's say you having problems getting a W-2. One example that comes to mind is let's say your employer went out of business and you can't get ahold of them-

Rocky Mengle: That would be a problem. You know, you lost a receipt, an important receipt that you need for a deduction or a credit and maybe you got to track down a duplicate. So that could be a reason. Of course, a family tragedy, particularly right before the April 15th filing deadline, that might be a good reason for extending. Or just have some other kind of change in circumstance in your family. You got married, have a child and you want a little bit more time. Or just because it's very hectic, or because you want to learn about the new tax laws that are going to apply to you in your new situation.

Rocky Mengle: So, and that doesn't make too much sense. And if you owe taxes, in a sense you still have to pay by April 15th in order to avoid the interest and penalties. You know, there's really no advantage to postponing if that's the only reason. If you're just trying to buy time, if you don't have one of those other good reasons we're talking about. And, you know, you just kind of shooting yourself in the foot.

Ryan Ermey: We're back and before we go, both of our guests today have agreed to indulge me in a quick round of financial Jeopardy. I mentioned the last time we did this that there was only one ever Jeopardy round that the category was actually personal finance, but there are plenty of financial categories. Today we're going to use a category from January 19th, 2018 for those of you who might remember, I guess. The category is financial gobbledygook, which we deal with an awful lot here at Kiplinger's.

Ryan Ermey: No. So EBITDA, something that we've talked about, or something that we haven't talked about on the show, but it's something we've talked about in the magazine. Essentially a measure of corporate profitability. It's an easy way to compare financial health between companies and some fund managers like to use enterprise value over EBITDA as a way to measure valuation, much like you would with a price earnings ratio. Alright, it's your board.

Ryan Ermey: Volatility is correct. The VIX is also known as the fear index. It's a way to measure investor sentiment and market volatility. Of course, we've talked a little bit about volatility. There are different ways to measure it. One that we've mentioned is standard deviation, which you can look at for an investment over a particular time period. If it's a higher number than the number for the index, then that particular investment is considered more volatile.

Ryan Ermey: That'll do it for this episode of Your Money's Worth for show notes and more great Kiplinger content on the topics we discussed on today's show, visit kiplinger.com/links/podcasts you can stay connected with us on Twitter, Facebook or by e-mailing us at podcast@kiplinger.com. And if you like the show, please remember to rate, review and subscribe to Your Money's Worth wherever you get your podcasts. Thanks for listening.

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Block joined Kiplinger in June 2012 from USA Today, where she was a reporter and personal finance columnist for more than 15 years. Prior to that, she worked for the Akron Beacon-Journal and Dow Jones Newswires. In 1993, she was a Knight-Bagehot fellow in economics and business journalism at the Columbia University Graduate School of Journalism. She has a BA in communications from Bethany College in Bethany, W.Va.