The July 15 tax filing extension deadline for 2019 returns is quickly approaching. The IRS had postponed the original tax filing deadline from April 15 due to the COVID-19 pandemic. But it’s standing firm on the July 15 deadline, and you’ll need to take action or risk facing a penalty. July 15 is also the deadline for making first- and second-quarter estimated payments for 2020. You’re required to make estimated payments if you expect to owe the IRS more than $1,000 when you file your 2020 return.
Here are some tips to preparing your taxes ahead of the deadline:
1. Collect your documents
Double-check that you aren’t missing anything. Use your prior tax returns as a guideline. You should be able to access most tax documents, such as bank and mortgage tax statements, online.
2. Consider an extension
If you’re unable to meet the deadline, you can file for an extension to gain extra time—until Oct. 15. The form for filing an extension is at IRS.gov.
3. Take advantage of IRA & HSA extensions
You have until July 15 to contribute to your IRA or health savings accounts for the 2019 tax year. The IRS extended that deadline from the original April 15 date. By putting more money into your IRA before July 15, you may be able to lessen your tax burden. For 2019 taxes, taxpayers under 50 can contribute up to $6,000; those over 50 can contribute up to $7,000.
4. Check deadlines for your pass-through entities
An extension of July 15—in most cases—was also granted for filing for pass-through entities. For example, check extensions and requirements if you have a sole proprietorship, single-member LLC treated as sole proprietorships for tax purposes, partnerships, multimember LLC treated as partnerships for tax purposes, and S corporations.
5. Set up a payment plan, if needed
The IRS is offering both shorter (within 120 days) and longer payment plans. The long-term plan, which carries some setup fees, is only for those who are unable to pay down their debt within 121 days. “The IRS understands that those affected by the coronavirus may not be able to pay their balances in full by July 15, but we have many payment options to help taxpayers,” IRS Commissioner Chuck Rettig said in a recent statement. “These easy-to-use payment options are available on IRS.gov, and most can be done automatically without reaching out to an IRS representative.”
As of June 12, the IRS reported it had received 136.5 million individual income tax returns, down from more than 144 million a year ago. About 93 million filers have received refunds, averaging $2,763, the IRS notes.
Source: REALTOR® Magazine