We’ve all had to adjust to many changes in this time of the pandemic crisis – from how we shop for groceries in the era of social distancing, to keeping up with managing household finances. Included among these changes is the extended, new deadline to file federal and state income taxes.
In the early weeks of the coronavirus crisis, the federal government gave individuals and businesses extra time to fund their tax bills. The IRS extended the deadline to both file and pay 2019 Federal income taxes from the traditional April 15 to July 15, 2020. Most U.S. states followed suit.
Now with the extended deadline just around the corner, here are three things to keep in mind.
1. Understand What the July 15 Tax Deadline Means to You
People expecting a refund have likely applied for and received their refund by now. If not, there is still time to file taxes to obtain your refund.
For those facing payment of a tax bill, the delayed deadline was intended to help out with budgets and temporarily reduce financial stress.
The option to defer federal and state income tax payments was offered without paying any penalties or interest. That’s good news for those taking advantage of this extended deadline.
Note that the extended deadline did not change a person’s underlying tax obligation – any tax rates remain the same.
While states did not have to follow IRS guidelines for state taxes, most did.
2. Explore Options
For those looking to file beyond the new July 15 tax deadline, you can request an extension to October 15, 2020 by filing Form 4868. Remember that an extension of time to file is not an extension of time to pay. Those facing tax bills will need to estimate and pay any tax liability by July 15 or face additional interest and penalties. If you’re an individual taxpayer, you can request an extension by filing Form 4868 through your tax professional, or the IRS Free File Online program.
It might also be helpful to call the IRS at 800-829-1040 to discuss relief options, which may include an installment agreement. An installment agreement lets you pay your tax debt in monthly payments. However, with such an arrangement, you typically still owe interest and penalty charges.
In certain cases, it is helpful to explore a temporary delay in the collection process.
The IRS is the best source of information to explore these options.
3. Get Guidance
To understand all the options you have when thinking about the July 15 tax deadline, read about the ins and outs of the extended deadline directly from the IRS.
In this time of unexpected impacts to family household budgets, looking at a person’s full financial picture can help ease stress – whether it’s reading about tax-saving tips, or exploring setting up an individual financial counseling session.
A free review from someone who has your interests at heart can be helpful for those facing financial anxiety in the face of the deadline.
Our NFCC-certified counselors guide you through a process to assess your financial situation, understand your goals including meeting tax payment bills and create an action plan to work toward them.
These tips are for general guidance for you to explore options that might be of use. For more detailed information, visit the IRS at www.irs.gov or talk to a tax professional.
GreenPath Financial Service
GreenPath, A Financial Resource
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