The COVID-19 pandemic has brought almost the whole universe into a standstill. Almost every sector of the economy has been shaken.
Millions of Americans have filed for unemployment claims as most companies scaled down or shut operations completely.
Consequently, the Treasury Department made a decision to extend the deadline for individual income tax returns up to July 15 from the usual April Tax deadline.
Nonetheless, there’s more than meets the eye as far as the tax deadline extension is concerned.
The tax filing extension announced by the treasury department applies to various tax-related deadlines also. There is still a possibility for extension – giving most taxpayers a chance to increase their 2019 tax refunds.
What else is due on July 15?
Although the treasury department extended the deadline for filing income tax from April to July 15, the July deadline doesn’t only affect the tax return process. All the other taxes that went overdue in the last few months have also been delayed.
A good example is the estimated tax payments. People who are self-employed as well as independent contractors are usually expected to remit estimated tax payments quarterly to the IRS.
However, for 2020, the deadlines for the first and second quarters have been extended to July 15. This means that all self-employed Americans have the same deadline to file returns. Besides, all other tax deadlines have been pushed to July 14.
Is it possible to get more of an extension?
If anyone still requires more time to prepare and file their 2019 tax returns, it’s good to mention that to the IRS just like any other tax year. The IRS will definitely grant you an extension.
A tax extension is not new to most taxpayers. This can be done by filling a simple form either online or by mail.
Extensions usually go for six months – but for 2020 it will be only for three months because of the changes in the tax deadlines. This means if you request an extension today, the IRS will expect to have complied by October 15.
At this juncture, it’s worth noting that a tax extension is meant to give taxpayers more time to file but not to pay. All outstanding balances will be due by July 15 regardless of whether your tax return is ready to file or not.
The best thing to do is to find out how much you are going to owe the government and ensure that you submit this amount together with the extension request. You can also do that separately provided the payment is done before July 15.
Is it still possible to make contributions to HSAs and IRAs?
Another important thing you need to note about the 2020 tax deadline extension is the provision that extends the ability of people to contribute to their individual retirement accounts (IRA) as well as health savings accounts (HSAs).
Why is this important?
All contributions to HSAs and IRAs are tax-deductible until the annual maximum and are supposed to be made by the tax deadline of every year.
The traditional IRA contribution maximum for 2019 is $6,000 for all qualified people below the age of 50 and $7,000 for people above 50 years.
For the HSAs 2019, the limit for eligible individuals with health coverage is $3,500 or $7,000 for a family cover.
Last but not least, it is important to note that even if you had already filed your 2019 tax returns, it is still possible to take advantage of the extension to seek refunds of the extra tax savings you are entitled to.
IRS gives individuals an opportunity to file for amended tax returns even after the deadline has passed.
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