Top 10 things to keep in mind for your tax filing

by Mounica Kota | Jul 17, 2020 | Charitable Contributions, ITIN, Tax Extension, tax filing

Top 10 things to keep in mind for your tax filing

Filing tax returns can be tricky, confusing and you ought to be cautious while filing your tax returns.

So, let us give you some basic tips to follow while filing your tax returns. These tips will help in avoiding common mistakes to ensure that your taxes are filed properly and you obtain the maximum refunds.

1.Filing for an extension

You can easily file for an extension in the timeline of your tax return filing but, an extension in the due date for tax payment cannot be done. You might have the thought that you may end up having taxes to pay once your return filing is completed. So, you should pay whatever amount you owe to the IRS by the July deadline so that you could do reconciliation after the returns have been filed successfully. If you do not pay your taxes by the deadline, you might have to pay a penalty which you should try to avoid.

2.Document your charitable contributions meticulously

Nowadays, charitable contributions are getting a lot of scrutiny from the IRS. So, if you are planning to claim charitable contributions as itemized deductions in your tax returns then you must have written acknowledgment from charitable organizations for contributions made of $250 or more. The contribution made can only be claimed if they are made to a qualified organization. In case of your contribution being less than $250, you must keep a list or record of what you contributed and to whom.

3.Know about new due dates for some tax returns

There might be some information forms that would be needed by you for filing your tax returns might be having different due dates than that of your tax returns. So, you need to be alert and visit the IRS’s website for the information on these new due dates.

4.Need for amendment

Many taxpayers have to file amended tax returns due to reasons like receipt of updated Forms 1099, Schedules K-1, and other information forms later than filing your actual tax returns. You need to be aware of the factor that if you are receiving any rectified information returns ad you have already filed your tax returns then you would not have to amend your returns if the difference is not more than $100 in your income or not more than $25 in your withholding. In these cases, your information and filing both would be considered as correct and no penalty would be charged.

5.Expiry of your ITIN

If you are using your ITIN for tax returns filing, then you must be careful about your ITIN being expired. If your ITIN has not being used for filing federal tax returns once within three years then your ITIN must have been expired and it needs to be renewed. You can renew your ITIN by submission of Form W-7 and the necessary documents as well. If you are filing your tax returns without a valid ITIN or without submitting a renewal application for your ITIN then there might be adjustments made into your tax returns. Your income tax return would be processed but you would not receive the refunds and any exemptions claimed on the income tax return would be denied to you.

6.Disaster losses

In case of any loss incurred in an area that has been federally declared disaster area, the losses can be claimed as an itemized deduction on your federal income tax returns. This loss must be related to your home, your vehicles, or any household items and the amount which you can deduct are reduced by any insurance payment which you have received or reduced by any salvage value of your property. These losses can be deducted on Schedule A of Form 1040 for the year in which the losses have occurred.

7.ID Theft

The tax season is the best season for identity thieves. You must be very vigilant and should try to keep your financial information secure. You should not send your financial information to a tax preparer by electronic medium if the medium is not encrypted. Moreover, you should be careful about phishing scams which can be in the form of fake email, text, or anonymous phone call.

8.Private debt collectors on the job

There has been a relative change in the IRS procedure i.e. the use of private debt collectors for certain federal bills that are overdue. If your tax debt is to be collected by debt collection agencies then you would be notified by a letter that confirms this. The collection agencies would send collectors who can be said as IRS contractors and any check you pay would be addressed to the IRS.

9.Query resolution with the IRS

Your queries on tax returns can be addressed by the Interactive Tax Assistant present on the IRS. This can be helpful for you in resolving your queries and thus, assisting you in filing your tax returns correctly.

10.Selection of your tax preparer

If you are planning to hire a tax preparer for preparation of your tax returns then you must obtain referrals, check the credentials of the tax preparers, interview them, and understand the method they use to bill, etc. These are the vital information that you must collect and you must check if they have a PTIN (IRS Preparer Tax Identification Number) or not which is mandated by the law.

Conclusion

Hence, you can follow these tips and file your tax returns successfully on time without facing any inconvenience or difficulties.

All you need to know about Multiple State Tax filing

by Mounica Kota | Jul 11, 2020 | Multiple State Tax, Resident State Tax, State Tax Return, tax filing

All you need to know about Multiple State Tax filing

Multiple state tax filing As the pandemic COVID-19 continues to affect common people in the worst manner, many Americans who were residing in different states for work are gradually returning to their native states. People have now decided to return to their native States and work remotely. So, now you have quite a large number of tasks lined up for yourself.

You need to settle down, make yourself a part of the new community, and obtain a new driving license, register to vote in the new state, and many more. One more additional task is the filing of the tax return. Until now, you were filing only the Federal tax returns but now you would have other tax returns to file. These would include the need to file a tax return in the State you moved from to the State you have moved to.

Queries and confusions related to multiple state tax filing usually arise if you are earning income in different states during the same calendar year. These confusions can occur due to several reasons such as

If you are changing your residency in the mid of a calendar year to a new State.
If you are into a profession where your work makes you present in multiple states in a particular calendar year.
If you own investment property outside your home state.

Determination of State residency

For most the Americans, determination of resident state is quite simple. The complications and risk of being open for a State Audit might arise if your stay time is split between multiple states.

You will have to prove to the State about your residency by showing up things like where you had been living in most of the year, where you own property; your bank accounts are present in which State, where are you registered to vote, etc.

Determination of your State residency is the primary step in the calculation of your State tax as it will help in determining the State in which you would have to file a state tax return as a resident.

Non-resident State tax return

For those non-resident states where you have earned income, you will have to file a Non-resident state tax return. In this form, you will have to report only those incomes which were earned in the Non-resident states.

a. In case, you are the owner of an investment property in the Non-resident State then your tax return to be reported would be rental income minus the associated expenses.

b.If you are a consultant who is working in some project out of the resident state then the income to be reported would be the proportion of your salary earned while you are working on that project.

c.There are some states such as New Jersey and Pennsylvania which are into an agreement by which there is no obligation for the residents of the states to file a non-resident state tax return if they are earning in the non-resident state.

Resident State tax return

In case of your home state’s tax returns, you have to report all income that you have earned which even includes the income that has been earned in different states. This implies that all your income in that calendar year would be subject to resident state’s tax laws.

While you are completing your tax returns, you will have the opportunity to list down the taxes which you owe to pay to other states. This would be applied as a credit against the taxes which are owed to the resident state

and so,you are not in a bad state by making a part of your income outside your resident state.

Part-year resident State tax return

The part-year resident State tax return would be relevant for those Americans who have moved from one state to another in the middle of a calendar year. By this, you would have an opportunity to split your income between the two states and claim to be a resident of both the states.

For the calendar year in which you are moving from one state to another, you would file the Part-year resident State tax return. However, you do not have to worry about paying double of your State tax.

Mostly, states would tax only income earned within the state and not outside the state. When you know the exact income earned in each state, you can easily report the exact income for each state. This can be feasible if you had a savings account in your old state which you closed while moving and opened a new one in your new state.

Conclusion

Hence, filing of State tax returns is somewhat confusing and would take some more time. You must determine your state of residency carefully, understand your income allocation as you cannot take the numbers reported on your W-2, and review your state tax returns carefully.

Now is the time to switch to Online Tax Filing, if you have not done it already

by Mounica Kota | Apr 25, 2020 | e filing tax, tax filing, tax returns

Now is the time to switch to Online Tax Filing, if you have not done it already

Gone are those days when tax filing used to be a tedious job with meeting a tax preparer, filing out tax returns manually, sending your returns to the IRS, etc. online tax filing Today, everyone wishes to perform their tasks quickly without investing much time and conveniently as well. Now, this is also applicable to the procedure used for tax filing.

If you wish to complete your tax filing easily without facing any inconveniences, the best method to opt for is online tax filing or e-filing. By online tax filing, you would be able to file your tax returns easily by the electronic medium without the need of commuting to anywhere or mailing anything.

Benefits of e-filing taxes

Some of the major benefits of the online tax filing method can be noted below.

Online tax filing or e-filing is the most secure means to deliver your tax returns to the IRS.
Confirmation from the IRS is sent once your e-filing is done. This gives you a sense of mental peace that your tax returns have been received successfully.

3. By e-filing your tax return, you will be obtaining your returns very soon i.e. within around 21 days of filing. So, e-filing is the fastest and easiest method to obtain your tax refunds.

4. Moreover, e-filing is less expensive as compared to other methods of tax filing.

The Rise of e-filing

In 1986, e-filing began as a pilot project in Cincinnati, Phoenix, and N.C. In that particular year, the number of tax returns filed by e-filing was 25,000. Gradually, the number of Americans using the e-filing method started increasing.

During 2010, 141.5 million income tax returns were filed by the taxpayers out of whom 70% was done electronically.

Due to the different benefits offered by the e-filing method, more and more taxpayers are willing to use this method for filing their tax returns. In the last decade, the number of taxpayers opting for e-filing has increased by around 145%. Since 1990, the IRS has processed approximately 1 billion income tax returns securely filed by e-filing.

In 2011, the IRS had also taken certain initiatives to encourage people for e-filing. The IRS had sent postcards to those taxpayers who had filed their tax returns by paper. The announcement was that the IRS would no longer be mailing paper tax packages to the taxpayers.

How does e-filing work?

For the low and middle-income taxpayers, the IRS has a tool known as IRS Free File. This tool can be accessed on the official website of IRS i.e. www.irs.gov. By this tool, it is easier for the taxpayers to make tax preparation online and also do e-filing at absolutely no cost.

This program or tool of the IRS is created by a partnership between public and private organizations i.e. the Federal Government and the private companies

which are engaged in tax preparation. Those companies which participate in this partnership must exhibit adherence towards strict privacy guidelines.

Americans having an adjusted gross income (AGI) of $57,000 or below that are eligible to select the best amongst the available online tax preparation services. Moreover, a taxpayer can also make use of the Free File Fillable Forms which are available on the official web page of the IRS. This is a free form which can be said to be the Form 1040 electronic equivalent. It takes the numbers as the input and performs the calculations.

After the e-filing of tax returns

Once the returns have been submitted by e-filing, the IRS will be reviewing your returns. This review procedure can take almost 48 hours.
If your returns submitted match all the personal information, and then your return is accepted.
After your return has been accepted and there is a refund due, you would obtain a refund within 21 days.

4. In case, your return submitted does not match with your personal information, your return would be rejected by the IRS. You can make the error corrections and re-submit your return again.

While e-filing your tax returns, you would be able to select the delivery method of your tax refund. Usually, it is advisable to select the Direct Deposit method as refunds are sent quite faster by this method.

Hence, e-filing is the norm nowadays. It is an easy, convenient and secure method to get back your money. So, if you have not tried it yet you can give it a try this time!!

References

https://www.taxslayer.com/blog/making-the-switch-to-online-tax-filing/

https://blog.turbotax.intuit.com/turbotax-news/irs-free-file-program-offers-free-tax-preparation-and-e-filing-13584/

https://blog.turbotax.intuit.com/turbotax-news/what-can-e-filing-your-tax-return-do-for-you-8998/

https://blog.turbotax.intuit.com/tax-tips/the-rise-of-e-filing-4887/

State and Local Tax relief laws for COVID-19

by Mounica Kota | Apr 11, 2020 | COVID - 19, federal government, global income tax, local tax relief laws, state tax relief laws, Tax credits, tax deadline, Tax Extension, tax filing, Tax Payers, taxes, US Government

State and Local Tax relief laws for COVID-19

The novel coronavirus (COVID-19) is spreading rapidly with a huge toll on the lives of common people and the global economy as well. In the US, the number of people being affected by the COVID-19 is on an increase and has reached around 4 lakhs now. The number of people who have died due to COVID-19 in the US is approximately around 11,000. Similarly, many people have even lost their livelihoods due to the closing or the downfall of several businesses.

However, Tax relief laws the Federal Government has been extremely considerate towards the sufferings of the common people and has taken several initiatives for providing some relief to them. The income tax payment and return filing deadline for the taxes due on 15th April 2020 has been postponed to 15th July 2020 by the IRS. Also, several new laws have been implemented by the Federal Government for the support of individuals, small and medium scale businesses even. The Coronavirus Aid, Relief and Economic Security Act (CARES), Families First Coronavirus Response Act, Stimulus Package, etc. are some of the major initiatives taken by the Government for providing support and assistance to people.

Tax relief laws by State Government

In the US, the tax rules and laws associated with the Federal Government and the State Government are different from each other. In this distressful period, the State Government of different states of the country has announced various changes and new rules related to the tax laws.

Let us talk about some of the major tax relief laws imposed by the State Government in the different states to deal with the economic disruption caused by COVID-19.

Alabama

In Alabama, the Revenue Department has announced on provisions for tax relief to small businesses that would not be able to pay their Sales tax for February, March, and April. Those small retail businesses whose monthly sales in the previous year have been $62500 or less on average can have the liberty to file their sales tax return for February, March, and April without paying the State Sales tax. There will be a waiver of late tax payment penalties for these small retail businesses through 1st June 2020.
The deadline for motor vehicle registration and vehicle property tax payment for March 2020 has been extended through 15th April 2020. Moreover, tax relief would be available for State lodgings tax account holders who are unable to make their payment for February-April 2020.
The due date for payment and filing returns for 2019 Income tax and 2020 estimated Income tax which were due on 15th April 2020 has been extended to 15th July 2020.

California

The Income Tax deadline for return filing, payment for 2019 and 2020 estimated tax payments Quarter 1 and Quarter 2 has been extended to 15th July 2020. This is also applicable for 2020 LLC taxes, fees, and 2020 non-wage withholding payments.
The Californian Employment Development Department (EDD) has declared that the employers in the State who have been impacted by COVID-19 can request a delay of up to 60 days in filing their State payroll reports or in the deposit of their payroll taxes without the payment of any penalty. The employers must provide a written request for this extension within 60 days of the original tax filing/payment due date.
Moreover, there has been an announcement on the deferral of business taxes for supporting small businesses that have been affected by the COVIS-19.

Connecticut

The Department of Revenue Services in Connecticut has extended the deadlines for filing the annual tax returns due on or after 15th March 2020 and before 1st June 2020 to 15th June 2020.
Also, the tax payments which are associated with these tax returns have been extended to the due date available in June.
The personal income tax return filing deadline has been extended to 15th July 2020 and this extension is also applicable for estimated tax payments of 2020 Quarter 1 and Quarter 2.

Columbia

For income tax returns, the deadline for tax payment and return filing which was due on 15th April 2020 has been extended to 15th July 2020.
In the District of Columbia, penalties/interest will be waived for the failure of sales tax payment for a period that ends on 29th February 2020 or 31st March 2020 if all the taxes are paid completely on or before 20th July 2020. This waiver does not apply to hotels or motels which can defer property tax under another emergency legislation.
This legislation states that hotels/motels can avail penalties waiver for the delay in payment of the property tax’s first installment of 2020 if the installment is paid by 20th June 2020.

Texas

In Texas, the Comptroller has declared that the sales tax collected in March 2020 would be remitted and would be available for emergency health care and other emergency operations for the people.
The Texan Comptroller has also insisted on the businesses in the State to make use of short term payment agreements for meeting the deadline of March 2020.

Massachusetts

The Department of Revenue in Massachusetts has implemented an emergency regulation amendment. According to this amendment, the sales and use tax return filing and payment which are due for the period of 20th March 2020 to 31st May 2020 will remain suspended. These tax return filing and tax payments would be now due for 20th June 2020.
Marijuana retailers, marketplace facilitators or motorcycle vendors are not included within this amendment. Any penalties or interest would be waived but the accumulation of statutory interest will continue.

Virginia

In Virginia, the Department of Taxation has announced that all the income tax payments which are due from 1st April 2020 to 1st June 2020 can be paid at the Department anytime on or before 1st June 2020. If all the payments are received by 1st June 2020, then the Department would waive all penalties for late payment otherwise penalties would start accumulating from the original payment due date.
However, interest would also keep accruing from the original due date of payment. Some of the taxes which are eligible for this extension and waiver are individual, fiduciary and corporate income taxes and any estimated income tax payments in this period. The State provides an automatic filing deadline extension for all the taxpayers for six months. Also, the Department of Taxation would consider requests for sales tax dealers who would request an extension in the sales tax payment and return filing which was due on 20th March 2020 and would extend it till 20th April 2020.

Montana

The Montana Revenue Department would assess the situation of taxpayers on a case-by-case basis and might permit the deferral of tax payments for up to one month at an instance.
The taxpayers must contact the Tax Collection Bureau by email, phone or mail at least one week before the actual due date of payment for making a deferral request.
The 2020 estimated tax payments for the first quarter have been extended to 15th July 2020 and the second quarter payment is also due on 15th July 2020.

Conclusion

Hence, along with the Federal Government, these are some of the tax relief laws/rules implemented by the different states. Taxpayers can communicate with their respective State tax agencies for complete details on the amendments made in their respective tax laws for COVID-19. These rules and amendments in State tax laws would act as a support for the distressed individual taxpayers or businesses in coping up with the economic disruptions.

References

https://tax.thomsonreuters.com/news/tax-relief-offered-by-states-and-localities-in-response-to-covid-19/?utm_campaign=T_CPE_NSL_9017597_covid19news_20200406_PR_EM1&utm_medium=email&utm_source=Eloqua&site_id=82769734&cid=9017596&chl=em&sfdccampaignid=7014Q000002SW4xQAG&elqTrackId=8432E59EA486AE4E4F693C86C8DF092E&elq=1fca5b09cc9e4a48adaa952eec158059&elqaid=22686&elqat=1&elqCampaignId=16486

https://www2.deloitte.com/us/en/pages/tax/articles/covid-19-state-and-local-tax-due-date-relief-developments.html

When you file your 2019 tax return will impact your stimulus payment?

by Mounica Kota | Mar 30, 2020 | Adjusted Gross Income, COVID - 19, federal income tax, income tax credit, SSN, tax filing, Tax Payers, tax return, taxes, US Government

Calculate your Stimulus Eligibility

When you file your 2019 tax return will impact your stimulus payment?

File your 2019 tax return will impact your stimulus payment, The pandemic COVID-19 continues to have a huge impact on the citizens of the USA. The Federal Government has been taking several steps to alleviate the burden that the common people might be facing due to this dreadful disease. One major step taken by the US Government to help out the common people in easing tax-related stress is by the passing of a $2 trillion stimulus bill. This bill includes a provision by which several citizens of the country would receive stimulus cheque from the Federal Government.

Eligibility for obtaining stimulus cheque

You can qualify to obtain the stimulus cheque from the Federal Government if the below-mentioned conditions are met.

If you are a US resident who is single and have an adjusted gross income which is less than $99,000.
If you file your tax returns as the head of the household and earn an amount below $136,500.
If you are filing your tax return jointly without any children and would earn an amount less than $198,000.

How to obtain the stimulus cheque

For obtaining a stimulus cheque, a person should have a Social Security number and should be the residents of the United States. The amount you can receive as a stimulus cheque is based on the adjusted gross income (AGI) that has been listed in your latest tax returns.

The IRS would be using the direct deposit information that you have provided during filing your last tax returns. In case your bank details have not been mentioned while filing the last return, the IRS would send the cheque to the recent address it has. It is also advisable to notify the IRS if you have shifted your house recently.

Factors affecting the stimulus payment

There are some major factors which can affect your stimulus payment such as

Filing status-If you are single you can receive $1200 as your stimulus payment, but for a married couple who are filing the income tax returns jointly the stimulus payment is $2400.

Size of your family-The stimulus payment also depends on the size of your family and for every child of yours who is below the age of 17 years; the stimulus payment is an additional $500.

Dependent-In case if you are claimed as a dependent on the tax returns of someone else then they would not be receiving any stimulus payment.

Level of your income-If you have a high income, the stimulus payment depends on the level of your income. For a married couple filing returns jointly, the stimulus payment starts reducing if the AGI exceeds $150000 and the same thing can occur for taxpayers who are single and their income exceeds $75000.

However, there is another factor is important in determining the stimulus payment and that is whether the tax returns for the year 2019 have been filed or not.

When are you filing your 2019 tax return?

Firstly, the IRS would always check out for tax returns related information for the year 2019 for making the stimulus payment. If there is no information available for the year 2019, the IRS would use the information for the year 2018.

In case, you have a Social Security Number but do not need to file the tax return then your stimulus payment would be done based on the information present in Form 1099-SSA.

This can be utilized as an opportunity by several taxpayers and if you have not filed or prepared your tax returns of 2019, then he can take into consideration the variables like Adjusted Gross Income, family size, etc. to determine higher stimulus payment to occur in which the year 2018 or 2019.

If, you feel that the payment was better in 2018 than you would hold on to that information or else if the returns of 2019 tend to yield more results then you should file your returns immediately.

Moreover, you must also consider any refund which you might obtain from the 2019 tax returns. It is quite obvious that you will have to make a decision i.e. either a large refund now and a smaller stimulus or larger stimulus immediately and the same refund after some months.

Stimulus payment can be said as an advanced payment which you would make against the actual credit that will be computed on the tax returns of 2020.

In case your advance payment done is less than what you would owe while computing the tax returns of 2020, then the excess would be obtained as a credit on the tax returns.
However, if advance payment is greater than what you owe while filing 2020 returns then there is no procedure to repay the excess amount or in recognition of the excess amount as income.

Conclusion

Hence, your stimulus payments are highly determined by when you are filing your tax returns. If you have not filed your tax returns for 2019 yet then you must consider if the tax return filing would either increase your stimulus payment or decrease it and then pursue your actions accordingly.

References

https://www.forbes.com/sites/anthonynitti/2020/03/26/when-you-file-your-2019-tax-return-will-impact-your-stimulus-payment/#32168a96b9dc

https://finance.yahoo.com/news/bigger-stimulus-check-waiting-file-123220996.html

https://www.cnbc.com/2020/03/26/coronavirus-stimulus-checks-heres-everything-you-need-to-know.html

https://www.bloomberg.com/news/articles/2020-03-26/when-and-how-will-i-get-that-1-200-stimulus-payment-quicktake

https://www.cnet.com/how-to/coronavirus-stimulus-check-is-official-find-out-if-youre-eligible-for-up-to-1200/

https://www.businessinsider.in/finance/news/how-to-get-a-stimulus-check-from-the-us-government-which-could-pay-up-to-1200-if-you-qualify/articleshow/74837139.cms

Extended Timeline For US Tax Filing

by Mounica Kota | Mar 27, 2020 | 401(k), COVID - 19, income tax, IRA, IRS, refund due, Tax Break, tax deductions, Tax Extension, tax filing, Tax Payers, Tax Planning, Tax Refund, Taxation

Extended Timeline For US Tax Filing

While the entire world is struggling to combat the effects of the dreadful COVID-19, the US Government has come up with new initiatives to provide some relief to the public who are paying the taxes. The Treasury Department in the US and the IRS have jointly announced last week that the US Government is extending the tax –filing deadline to 15th July 2020. This decision has been taken by the US Government to give the taxpayers extra time to handle their taxes amidst the outbreak of COVID-19.

The COVID-19 outbreak was declared as a National emergency last week by the President of the US. Also, the President had invoked the Stafford Act which gives him the power to mobilize the federal resources. The taxpayers would get an additional period of 90 days for filing their taxes and the IRS will not charge any interest or penalty for this time extension. However, for those taxpayers of the country who have already filed their taxes this year would not be affected in any means by these changes made.

File Tax Sooner If A Refund Is Due

Even though the US Government has extended the timeline, those taxpayers who don’t owe any money to the IRS can consider filing their tax by the original deadline of 15th April 2020. This would be wiser as the taxpayers would be able to collect their refunds sooner. This would be very helpful for those citizens who have already started seeing their economic condition and earnings being affected by the outbreak of the pandemic COVID-19.

Moreover, it is just that the Federal Government has provided this extension in tax filing but different states in the country have formulated different guidelines concerning the tax filing extension. It is advisable for those taxpayers who are planning to delay their federal taxes to understand in detail about the tax filing extension that their State Governments are offering as well.

The Due Date For Tax Filing In Case Of An Extension

There might be some taxpayers who may be concerned about their ability to pay the taxes even by 15th July 2020 due to the loss of a job or other financial issues related to the outbreak of COVID-19. These taxpayers can contact the IRS and discuss their options. The IRS has short-term and long-term payment plans which would help the taxpayers to pay their taxes conveniently. Short-term plans would give taxpayers around 120 days to pay the taxes whereas long-term plans taxes can be paid in installments over several months.

Earlier, when the tax filing deadline was 15th April and a taxpayer who would get an extension will not have to file his tax returns till October. However, now with the IRS pushing the tax filings date to 15th July 2020, it is quite not sure how long the taxpayers would be able to get if he is filing for an extension. But with the various options made available by the IRS, it is quite sure that taxpayers would have some relief.

Deadline For Quarterly Estimated Tax Payments

Many people are required to make quarterly estimated tax payments to the IRS in case of their income not being subject to the taxes of payroll withholding. This estimated tax payment is made by the division of the year into four payment periods with each period having its payment due date. Now, since IRS has extended the timeline for filing the taxes to 15th July 2020 it is quite uncertain that what would be the impacts upon the deadline of quarterly estimated tax payments.

Some Important Steps To Consider Before The Previous Deadline

Filing of 2017 tax return

If there is a refund due of the year 2017 for a taxpayer and the tax return has not been filed, then it must be filed by 15th April through the Form 1040 or Form 1040-SR to claim the money failing which IRS would keep the money.

Max out 401(k) by 31st December 2020

The contributions made towards the traditional 401(K) help in reducing the total taxable income of an individual. Many employers also contribute to the savings made by an individual; so, if there is enough contribution made then there are opportunities to obtain some money as well.

Contribution towards IRA and HSA

The contributions which are made to an IRA and HSA are eligible for a tax deduction. This contribution must be done by the April deadline every year. Now, even though the tax filing deadline has been extended to 15th July 2020 there have been no announcements made on the deadline for IRA or HSA contributions. So, it is advisable to accomplish this task by the April deadline to avoid any further hassles.

Conclusion

Hence, with the global economy coming to a standstill and numerous lives being affected due to the pandemic COVID-19, this action by the US Government is applauding. This would reduce a lot of pressure on those expecting to owe money to the US Government. However, if there is a refund expected then it must be claimed immediately so that the cash can be utilized during this period of emergency.

References

https://www.fool.com/taxes/2020/03/24/the-tax-deadline-has-been-extended-should-you-wait.aspx

https://www.cpapracticeadvisor.com/tax-compliance/news/21130318/irs-extends-2020-income-tax-filing-deadline-to-july-15

https://www.usatoday.com/story/money/2020/03/20/taxes-2020-irs-delay-april-15-tax-filing-deadline-july-15/2883840001/

https://www.cpapracticeadvisor.com/tax-compliance/news/21129714/when-is-the-new-irs-tax-filing-deadline-for-2020-coronavirus-delay

https://turbotax.intuit.com/tax-tips/tax-planning-and-checklists/important-tax-deadlines-dates/L7Rn92V1d

https://www.nerdwallet.com/blog/taxes/april-deadline-taxes/