Some good news during our stay-at-home time. Spring is upon us, bringing longer days, warmer temperatures, cheerful blooms … and a welcome extension of the annual tax deadline.
This historic pushback has moved the filing date from April 15, 2020, to July 15, 2020 — giving you some additional breathing room to complete your tax return. The new deadline applies to all taxpayers, regardless of how much you owe or if you’re receiving a refund.
Before you file, we’ve got some things you should keep in mind as the new deadline approaches, as well as some tools, information, and resources to help you gather all the information you need. With these in your tax arsenal, you’ll be well-prepared to hit the new due date.
Why did the deadline change?
Many do their own taxes, either via paper returns or online tax prep software. In these situations, there is minimal risk of spreading COVID-19 associated with the filing process. But you might not be able to complete the process on your own or have easy access to a computer. And some free tax preparation services like Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE), are held in public spaces that aren’t currently accessible.
The extension gives you extra time to access the technology (or documents) you need or until social distancing orders are lifted so you can meet with a professional tax preparer.
Bonus: The additional three months are helpful if you need extra time to gather all your financial records and set aside money to pay your tax bill.
Get return ready
Just because you have extra time to do your taxes, doesn’t mean you necessarily should take advantage of the extended time frame. You can still file your return any time before July 15.
More good news: Taxpayers don’t have to file any additional forms or contact the IRS to qualify for this federal tax filing and payment extension; you’re automatically pre-qualified for the extension. But that doesn’t necessarily mean you should rest on your laurels. The three-month extension could quickly evaporate if you’re not prepared.
These three steps will help you get through the process:
Organize your documents: Whether you’ve elected to receive your tax documents electronically, or you’re working with old-school paperwork, start a system to collect and organize all of your records. It can be as simple as a physical file or a digital folder where you collect everything you’ll need to file your taxes.
The paperwork you need to complete your taxes can be a hard-to-remember jumble of numbers and letters, including the two most common forms: W-2s and 1099s. Depending on your employment situation, you will need one or both:
- W-2 Forms from all employers you (and your spouse, if filing a joint return) worked for during the past tax year.
- 1099 Forms if you (or your spouse) completed contract work and earned more than $600.
You might have other 1099 forms, like 1099-INT, 1099-OID, or 1099-DIV, and are for different types of investment income (including interest income, dividend income, proceeds from the sale of bonds or stocks, and income from foreign investments).
Decide how you’re going to prepare your return: In a way, how you complete your return can be a choose-your-own-adventure experience. All of the usual options are still available, despite the extended deadline.
For example, you could grab a calculator and do everything with pencil and paper. If numbers aren’t your favorite but you don’t want to spend a lot of money filing your taxes, using tax preparation software could be a good option for you. This technology will walk you through the process and help you ID possible deductions and credits that apply to your specific situation.
If DIY is not your thing, you have a particularly complicated tax situation, or you just can’t think of calculating your taxes while juggling WFH and taking care of your kids, hiring a pro could be the best option for you.
Finalize your taxes: Once you’re ready to file (on July 15 or before), you can do so electronically or through the mail. Take note: The combination of filing electronically and electing to receive a refund via direct deposit is the fastest way to get your cash back. To set up direct deposit, all you need to do is provide your bank’s routing number and your account number. (You can also pay your tax bill via electronic transfer, too.)
Filing your taxes can be a stressful endeavor. The extension of this year’s tax deadline is some good news that everyone needs right now.
How are you filing your taxes this year? Tell us in the comments.