Hello July, which according to this year's goofy tax calendar is April.
That means instead of heading to the beach, which is closed anyway due to COVID-19, or taking a longer trip to Europe, which isn't letting U.S. residents in, again due to COVID-19, we're spending mid-summer focusing on taxes.
The main one, of course, is filing 2019 returns by the new Tax Day 2020: July 15.
That date also is key for several other tax tasks to take care of in July. Here are six that you need to deal with in these two weeks before the 2020 tax deadline arrives.
1. Get an extension to file.
The Internal Revenue Service said on June 29 that the 7/15 taxes due date is firm. But you still could get more time to file your 2019 Form 1040 by getting an extension. Send the IRS Form 4868 by July 15 and you'll have until Oct. 15 to finish up your tax paperwork.
You must, however, pay any 2019 taxes that you owe when you file for your extension. The IRS grants the added months to finish the forms, not to pay. So calculate a good estimate of that amount and send it along with your extension request.
I repeat, a good estimate. Don't send in an unrealistic amount. If you underpay, the due amount will be subject to penalties and interest that starts accruing the day after your filing deadline.
2. Make your first and second 2020 estimated tax payments.
Part of the IRS coronavirus reshuffling included delays in the due dates for both the estimated tax payments for this year's first and second quarters. Those usually are due on April 15 for untaxed earning in January through March and June 15 for similar money made in April and May. Now both are due on July 15.
If you're a regular estimated tax payer, this isn't news. But for folks who for the first time are getting money that isn't subject to payroll withholding, such as a gig job you took to make ends meet after you lost your regular work because of COVID-19 closures, this is a new challenge.
Estimated taxes are a pin, but not that difficult. Your tax pro or tax software can help you through the process of coming up with the proper estimated amount to pay for each quarter. Just make sure you don't miss this combined, extended estimated tax deadline. Failing to make required estimated tax payments or not doing so in a timely fashion will cost you added interest and penalty charges. And sorry, there's no extension for estimated taxes.
3. File your 2016 tax return.
You read that date right. If you didn't file your 2016 tax year return back in 2017 and were due a refund back then, this is the last chance you'll get to collect that money.
The law requires taxpayers to file a tax return within 3 years to claim a refund. If you haven’t filed a 2016 return, the Tax Day extension has pushed the deadline to July 15, 2020 as part of #COVIDreliefIRS. Get your old #IRS refund: https://t.co/ddNOlDdMTu pic.twitter.com/24BfTFnMXL— IRS #COVIDreliefIRS (@IRSnews) June 18, 2020
Millions of folks every year somehow overlook filing even when they're due a refund. The IRS wants to send that unclaimed refund amount to you, but you've got to ask. By law, you only have three years to do that. That means you must file a tax year 2016 Form 1040 to get that year's refund by this extended July 15, 2020, deadline.
If you don't file this month to get your old refund, Uncle Sam gets to keep your money. Forever.
4. Take care of IRS notices.
Like other government agencies and private businesses across the United States, the IRS sent most of its employees home in March to help slow the spread of the coronavirus. While some tax jobs could be done from home, much work piled up in empty IRS offices. Now that workers are back, they are sending out tax notices that have been languishing for months.
If you get one indicating the IRS has an issue with your taxes, don't ignore it. It probably has an old date by which you were supposed to act. Don't freak out about missing that deadline. Instead, look for the insert that should have accompanied the notice. It will have a new deadline, most of which are July 10 or July 15. Follow the instructions and do what is requested by the revised insert deadline.
You can see the types of notices that are being delivered with the new deadline inserts in my earlier post, Taxpayers get more time to deal with COVID-delayed IRS notices. Also check out this one with 10 tips on how to deal with IRS notices.
5. Contribute to retirement and medical accounts.
Financial planners always advise pay yourself first. That's difficult this year, what with so many folks losing jobs during the pandemic. But if you are among those who does have some cash to spare, consider using it in a tax-favored way that can help future you.
The July 15 deadline also applies to 2019 tax year contributions to individual retirement arrangements (IRAs) and health savings accounts (HSAs). These accounts are among the very few areas where a tax break doesn't have a Dec. 31 deadline. The IRS and HSA contribution due dates for amounts applied to prior tax years can be made and claimed on returns where applicable as late as the current year's deadline. Or July 15 this year.
If you have an HSA or IRA, either Roth or traditional, and want to make a 2019 contribution to either or both accounts, you can by July 15. You also have until that day to open an IRA if you don't have one, again Roth or traditional, and contribute for the 2019 tax year.
6. Don't forget your state taxes.
Most Americans also must file some type of state tax return. And most of those state (and sometime local, too) tax forms follow the IRS schedule, meaning they also usually are due by mid-April. This crazy coronavirus tax season, most of those states also followed the IRS and moved their state and local tax deadlines to July 15.
If you can't get your federal return done in the next couple of weeks, chances are you won't complete your state tax forms either since, in most cases, state filings are based on what you report on your federal taxes.
In these cases, check with your state's tax office about getting an extension to file these forms, too. In some cases, you don't have to do anything. Others state tax collectors, though, could require you at least give them notice that you'll be sending in the forms a bit late.
Tax time ticking away: If you haven't even started looking at your taxes yet, I get it. My focus and schedule have been seriously disrupted by COVID-19, too, so there's no judging here.
But time and tide and eventually the IRS wait for no man or woman and some children depending on their earnings. So you need to start thinking about your regular 2019 return filing soon, like now, as well as the other tax tasks tied to July 15.
More tax tasks on the way: Regular readers of the ol' blog know that I usually shamelessly plug the additional monthly tax tips listed in the right column. Thanks for noticing.
That additional tax moves advice is coming, but I haven't gotten around to updating that feature yet. See previous lack of focus and my screwy schedule comment. As soon as it's done, I'll plug it in here, after this preview segment.
And here it is.
I know that once you finish your 2019 tax return and take care of any of the other July tax matters in this post that apply to your situation, you'll probably want to be done with taxes for a while. Like until next January.
But unfortunately, whether it's a relatively normal tax season or a crazy COVID-19 one like this year, taxes don't stop after 1040s are filed. So you might want to check out some other tax moves to make this month.
As usual, they are [finally] over there to the right in the July Tax Moves feature. The monthly list of about one item per week starts under the digital clock counting down the rapid approach of Tax Day 2020.
In addition to tips to help you survive July 15, you'll find some advice on tax record keeping, hurricane preparation and, of course, fireworks of the American Independence and tax type.
I hope they all help you lighten your tax load and lessen your tax bill.
I hope you make it through this extraordinary tax month comparatively unscathed, both emotionally and financially.
Most of all, I hope you take care of yourself, your family and your friends and follow all the expert medical advice to get all y'all safely through the coronavirus pandemic. I want you around for a long time to keep talking, reading about and even sometimes messin' with taxes with me!
|Coronavirus Caveat & More Information
In 2020, we're all dealing with extraordinary circumstances,
both in our daily lives and when it comes to our taxes.
The COVID-19 pandemic and efforts to reduce its transmission
and protect ourselves and our families means that,
for the most part, we're focusing on just getting through these trying days.
But life as we knew it before the coronavirus will return,
along with our mundane tax matters.
Here's hoping that happens soon!
In the meantime, you can find more on the virus and its effects on our taxes
by clicking Coronavirus (COVID-19) and Taxes.