updated - July 13, 2020 Monday EDT
Taxes are due every April 15, usually, but 2020 has thrown us all a big fast curveball. With the outbreak and uncertainty surrounding the Coronavirus, the White House has decided to push the due date back 90 days.
What does this mean for you, and what are the significant motivating factors behind the call? In the following article, we'll be exploring the answers, as well as giving you a game plan for how to proceed. Let's begin!
Washington, DC, particularly President Donald Trump, has decided a delayed deadline best for Americans currently living in fear of the Coronavirus. Regardless of where you fall on the political spectrum - the move has garnered bipartisan support - it was a call likely made for the following reasons.
The tax due date was pushed back, in part, because it's hard to tell where unemployment will be in another 30 days. Many employers allow work-from-home options. In these cases, employees' statuses could be largely unaffected.
However, there are many more individuals in retail and service-based industries where presence is essential to the fulfillment of duties. These individuals face significant job uncertainty, and, since many are paid hourly, they stand to lose substantial income or even their entire positions as restaurants, bars, and stores close around the country.
Another reason for holding off on the due date for state and federal taxes can be seen in the behavior of the stock market. Many Americans build wealth and enable themselves to retire, thanks to the stable returns of stock and mutual fund investment.
Unfortunately, the outbreak of Coronavirus has sent the markets into a volatile tailspin that has completely wiped out the significant gains made since President Donald Trump took office. Of course, the situation is still unstable.
That means the market could come roaring back in another 30 days. Even so, the IRS cannot bank on that, and it's a likely motivator for moving back the tax deadline.
The IRS also isn't looking for you to make a payment this April because they know there's a long way to go before we figure out what happens next. Coronavirus is a virus that can mutate into multiple strains, just like influenza.
As medical researchers rush to contain the virus and figure out a path to curing or treating it, it's difficult to say what could happen if businesses stayed open. Americans could find themselves infected in numbers unsustainable to the country's healthcare system.
Not everyone can handle a tax due deadline on their own. They need help from a tax accountant. Those services might not be available to them in the wake of the outbreak.
While it's always possible to do taxes on your own via software, it's not something that can be required of a taxpayer. So, until tax services can resume unabated, a delay in the deadline should help uncertain taxpayers until they can get the help needed.
Now that you know the underlying factors behind Washington's decision to push back the tax filing deadline, it's time to act. You don't need to feel rushed by the revolving circumstances. Just get a game plan in place.
In this section, we'll be going through the five steps you need to start taking right now, so the rest of your tax season is as stress-free as possible.
1. Gather Your Paperwork
If you are a business owner, you may want to get W2 online services set up if you haven't had the chance to already. This will ensure your employees have ready access to their paperwork from any location. It can be used individually as well.
The goal is to have all your paperwork in place before starting your taxes. This will help you know how to file, what you've made, what withholdings you can claim, and what your final tax payment will be.
2. Look at the Time Table
Work for a single employer? Then getting your paperwork together was the easy part. For those planning to itemize or file a Schedule C, it can be a little more difficult compiling all deductions and paperwork under one umbrella.
Add to the mix that you may be working from home, fighting for the next roll of toilet paper, and being forced to homeschool your children, and time can get away from you. Start where you are.
Map out how many days you have left. Take some time each day to get organized and run any necessary computations.
3. Send Final Payments If Necessary
Once you are organized and have calculated final payments, send off your checks to the required branches of the IRS and state revenue office to settle any outstanding tax burdens. Do this now so you can avoid getting started late on the 2020 tax year.
If you find out you owe nothing, then just sit back and relax. Or, consider setting up some time to do your taxes early.
4. Decide How You Will Do Your Taxes
Some people trust their accountants alone. Others, through a mixture of quality software and more straightforward filing instructions, are confident enough to do it on their own.
The chances are good that if you want to do your taxes early, you could be on your own. Want to wait until July 15? Then a professional tax service should be back up and running by then.
5. Prepare for Delays
You may not mind if it takes the IRS or state revenue office longer amounts to cash your checks. However, refunds that aren't getting deposited into your bank account in a timely fashion? That can get annoying!
Nevertheless, you have to prepare for the delays ahead mentally. It could take longer than usual to get money back, but that also might be offset by cash payments.
If you were worried about how taxes are due to everything else going on, don't be. The government is working hard to understand the plight of US citizens, and they have responded accordingly by backing up the deadline.
Rest easy, and take advantage. For more tax-related articles and developments, check out some of our additional posts.
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