In a normal year, if you hadn’t filed your taxes by mid-June, the Internal Revenue Service (IRS) would probably have been in touch and penalties already incurred. However, for many a reason, 2020 is far from normal, with the logistical complications created by the coronavirus pandemic seeing the usual April 15 tax deadline pushed back to July 15.
With an additional three months to prepare, file and pay any tax bills they might owe, Americans have been able to leave the best tax software untouched for a little longer than usual. However, time is quickly ticking away, and now just one month remains before you need to have your affairs in order.
If you’re among those tax-filers making the most of the extra time you have been afforded, here are six things you should contemplate as the new deadline begins to loom into view.
Check your state tax deadline
Even if you’re comfortable that you have plenty of time to get your taxes prepared, it may be worth double-checking that the deadline you have in mind is the one that you think it is. The rationale for a quick check is that the July 15 extension applies to federal income taxes; the due date for filing state income taxes, however, is not always consistent across the board.
All states with a personal income tax have also extended their April 15 due dates. However, what might cause a problem is that just 40 states have extended their deadlines to July 15, while the rest have various other deadline dates that need to be met. To be on the safe side, check your state’s department of revenue website for information specific to where you live.
File if you’re expecting a refund
Taxpayers who are anticipating a tax refund are probably best filing sooner rather than later. If the coronavirus pandemic has affected your finances, there could be a more-than-useful sum of money waiting for you right there.
Three-quarters of those who file taxes qualified for a refund in 2018, receiving on average $3,000, so these are amounts that no-one will want to miss out on. Importantly, if you’re entitled to a refund for 2016, you are now in the last-chance saloon for filing a prior year tax return to make sure that payment finds its way to you.
The IRS will issue most tax refunds within 21 days of accepting a tax return, but filing electronically, and using tax software, is advisable. As another aside, taxpayers must also file either their 2018 or 2019 return to secure their coronavirus stimulus check.
Maybe wait if you think you owe
On the flipside, if you’re anticipating a tax bill, there is a case to be made for waiting until the last minute to file. This might prove particularly helpful if you’re struggling financially, with the money proving more useful in your pocket than in the coffers of the IRS. However, remember that the bill will still have to be paid, so make sure you budget sensibly to still have the funds available ahead of July 15.
The filing process might be a little different
Another side effect of the coronavirus has been the inability of the IRS to process individual paper tax returns. As a result, taxpayers are being urged to file electronically to make the process both safer and speedier than sending your documents through the mail. With more than 90% of taxpayers having already filed electronically this year, the IRS has quickly adapted to the situation it finds itself in. Plans are also already in place to allow tax return amendments to be made online for the first time this summer.
If you’re filing online for the first time, gather together all the information that you would need if you were filing a paper return and then visit the IRS website for how best to proceed. If your income was $69,000 or less last year, you should be eligible to use IRS Free File software. For those with slightly more complex filing matters, the best tax software could definitely help.
Contact your tax preparer
If you usually have a tax preparer ready everything on your behalf, it might be worth checking on their availability now. COVID-19 has thrown the normal working lives of most people out of shape, and tax professionals will be no different. There is also a chance they will have more customers demanding their services than usual, so make sure you schedule your slot early, ahead of the inevitable last minute rush.
Is July 15 still not long enough?
If you fear the July 15 deadline still doesn’t give you enough time to file, it is possible to ask the IRS for an extension until October 15. You can request this extra time by filing Form 4868 through your tax preparer, tax software, or the Free File link on IRS.gov.
Importantly, the form only allows an additional three months in which to file a federal tax return - you’ll still need to pay your taxes by July 15 in order to avoid possible penalties. For this reason, the extension form asks taxpayers to estimate their tax liability and pay this estimated amount.
Take the stress out tax filing and save money on a tax preparer with the best tax software.