It is important to know how COVID-19 is affecting taxes so you can meet the appropriate deadlines and have your paperwork in Hayward, CA ready on time. Since tax filing is something that can be done virtually, you do not need to meet directly with a tax preparer and can complete the process through email and telephone calls. However, it is still good to know what to expect. Here are five things to know about COVID-19 and tax filing:
- The deadline is extended: The federal tax deadline has been extended from April 15 to July 15 for individuals and businesses alike. You do not need to file an extension to enjoy this benefit—it applies automatically. California is also complying with this deadline, so July 15 applies to both your state and federal tax returns.
- Refunds process as normal: Nine out of 10 tax refunds process within 21 days or fewer from the date an e-filed return is accepted and direct deposit initiated. This timeline still applies even with the extended filing date. The IRS expects to process refunds as normal, and for any delays to be minor.
- More time for IRA contributions: April 15 is also usually the deadline to make IRA contributions count towards 2019 tax information. With the extension of the deadline, that is now July 15 as well. Making contributions up until that point will include them in your 2019 tax filing, which could offer significant advantages and may increase your refund.
- Stimulus checks require recent tax filing: If you have not filed 2018 or 2019 tax returns, now is a good time to catch up on these tasks. The relief act that recently passed provides stimulus checks of up to $1,200 for individuals, $2,400 for joint tax payers and an additional $500 for each qualifying child. These amounts are based on your latest filed tax returns, so if you are slow on filing your 2019 taxes, your check and direct deposit information will be determined by your 2018 tax returns. However, if neither year has been filed, you will likely not receive a stimulus check. If you want to benefit from a stimulus check, now is a good time to catch up on your tax returns.
- You can defer payments: Self-employed individuals and others who may owe taxes may defer their payments by up to 90 days free of penalties and interest. This includes any taxes due for 2019 (including self-employment tax) as well as the first quarterly payment for 2020 normally due on April 15. However, please be aware that the second quarterly payment is still due on June 15, so be prepared to make two quarterly payments very close to one another. Even if you file an extension to October 15, you still need to pay your taxes by July 15.
If you need assistance with understanding how COVID-19 is affecting your taxes, Menjivar & Company CPAs, Inc. is here for you. Located in Hayward, CA, we offer tax preparation and consultation services during this trying time and all year long. Contact us today to schedule a consultation.
Categorised in: Tax Return