Tax Strategist Advises IRS Extensions Due to National Tragedy
The COVID-19 pandemic has caused devastation and tragedy across the country, affecting individuals, families, and businesses alike. The government has implemented several relief measures, including tax extensions, to mitigate the financial impact on taxpayers.
As the pandemic continues to take its toll, tax strategist advises that taxpayers take advantage of the IRS tax extensions due to the national tragedy we're all experiencing.
The IRS has extended the filing and payment deadline from April 15th to July 15th, 2020. Taxpayers can defer their tax payments and file their returns without incurring interest or penalties until the deadline.
This extension is available to all taxpayers, including individuals, trusts, estates, corporations, and other non-corporate tax filers. Self-employed individuals and people with estimated tax payments due on April 15th can also benefit from this relief measure.
However, tax strategist advises that taxpayers should carefully consider their options before deciding whether to take advantage of the extension. Here are some points to consider:
1. Financial situation
First, it’s essential to assess your financial situation and determine if you need additional time to file and pay your taxes. If you have the means to file your taxes and pay your tax bill by July 15th, it may be in your best interest to do so to avoid accruing interest and penalties.
If you’re facing financial hardship due to the pandemic, you may want to consider taking advantage of the extension. The additional time may allow you to prioritize other financial obligations and manage your cash flow more effectively.
2. Refund
If you’re expecting a tax refund, there is no need to wait to file your tax return. Filing your tax return early can help you get your refund sooner, which may be beneficial if you’re facing financial hardship.
3. Estimated tax payments
If you’re a self-employed individual, you’re required to make estimated tax payments throughout the year. The IRS has extended the deadline for the first and second quarter estimated tax payments to July 15th, 2020.
If you’ve already made estimated tax payments for the first or second quarter of 2020, you can’t get a refund of those payments, even if you file your tax return early. However, you can apply any overpayment to your next estimated tax payment or request a refund after filing your tax return.
4. Retirement contributions
The deadline for making contributions to your individual retirement accounts (IRAs) and health savings accounts (HSAs) has also been extended to July 15th, 2020. It’s essential to consider the potential tax benefits of making these contributions before the deadline.
5. State tax returns
The IRS extension applies to federal tax returns and payments, but states have different rules regarding tax deadlines. It’s essential to check your state’s tax website or speak to a tax professional to determine if your state has extended its deadline.
6. Tax planning
The extended tax deadline may provide an opportunity for tax planning. Taxpayers should consider if they can minimize their tax liabilities and take steps to reduce their tax bill before the deadline.
For example, if you’re a self-employed individual, you may want to maximize your retirement contributions before the deadline to reduce your taxable income. You may also want to consider making charitable contributions before July 15th to take advantage of the tax deduction.
In conclusion, tax strategist advises that taxpayers consider their financial situation, tax liabilities, and other factors before deciding whether to take advantage of the IRS tax extensions due to the national tragedy. The extended deadline may provide relief to taxpayers facing financial hardship but may not be beneficial to everyone.
Taxpayers should consult with a tax professional or financial advisor to determine the best course of action for their situation. The pandemic has created unprecedented challenges, and it’s essential to take advantage of all relief measures to manage your finances effectively during this difficult time.