There is no doubt that the COVID-19 pandemic has made life look very different for the time being. Among all of the quarantines, school and restaurant closures, and overall social distancing, there have also been financial measures that need to be considered. Everyone knows about the stimulus payments that have been all over the news, but the tax deadline has also been moved, and there are a ton of ramifications that go along with it. There are some important things to know about this tax deadline extension that you should be aware of.
Refunds Are Not Delayed – It Is Still Recommended That You File Now
The decision to alter the classic Tax Day of April 15th was not due to any slowdowns or backup at the IRS. In fact, the tax deadline extension is a courtesy and certainly not a requirement. The IRS is planning on processing tax returns and refunds on a usual schedule. If you are likely due a refund, there is every advantage to filing your tax returns as soon as possible to ensure your refund arrives in a timely fashion.
Your Stimulus Payment Amount and Location Are Based on Your 2019 Tax Return
Another incentive for filing your tax returns sooner rather than later is the fact that your stimulus payment amount and location are based on your most recent tax returns, either 2018 or 2019. If you’ve had a major life event, such as getting married, having a new child (dependent!), or even something more mundane as changing your bank account location, you’ll want to file your return to ensure that receiving your stimulus payment goes as smoothly as possible.
Not All States Moved Their Tax Deadline
An important thing to note is that this deadline extension to July 15th is a federal decision and may not apply to all the states. Many states have conformed to the new IRS-mandated deadline, but not all. In addition, if you own a business and need to file business taxes, sometimes the state business and individual deadlines are different. If you are in a state that requires a tax return, be sure to double-check the guidelines for your state and remember that they may differ from the federal tax deadline extension.
The Deadline Extension Also Applies to IRA Contributions
One of the major tax deductions that people take are contributions to an IRA retirement plan. Normally, you have until the tax filing deadline to make contributions to the prior tax year. With the extension to July 15th, this deadline is also extended, giving you extra time to make IRA contributions for the 2019 tax year.
These important reminders will help make sure that your tax time stays as smooth as possible in these turbulent times. If you have any questions, please contact us now. We look forward to assisting you!