At the best of times, the tax season is stressful for many consumers, but the 2020 pandemic has exacerbated people’s anxiety.
At the best of times, the tax season puts a lot of pressure on many consumers, but 2020 will exacerbate these concerns. Starting in March, home-based orders across the United States have made it more difficult to visit tax planners in person, and other taxpayers may be facing many life pressures, including loss of income or illnesses associated with their families with COVID-19.
Craig Richards, director of international tax services at the Trust Foundation, cited statistics from the Internal Revenue Service as saying that as of mid-June, the IRS had submitted 7.6 million fewer tax refund reports than the same period last year. He pointed out that the tax returner was “trapped because of working from home and was unable to access all the resources they had while in the office”.
Christina Taylor, senior manager of tax business at Credit Karma Tax, said that the important thing to remember is that taxpayers need to take action before July 15 to avoid being penalized by the IRS.
Taylor said: “The worst thing is to do nothing.” “Taxes will not disappear.”
The Free Tax Service posted an advertising sign in front of the tax cut-off date. (Photo: Justin Sullivan, Getty Images)
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Some people called for another delay. In a letter to the IRS on June 12, Rep. Max Rose from New York pointed out that taxpayers were unable to receive many free tax preparation services during the pandemic, such as the Taxpayer Assistance Center, which is still closed by the IRS. In addition, Rose pointed out that many taxpayers are “distressed” and face financial difficulties. He requested a delay in paying taxes and arrears at the same time until October 15.
Treasury Secretary Steven Mnuchin said last month that the second extension of the July 15 tax cut-off date to September 15 is “something we might consider.” However, the US Internal Revenue Service and the Treasury Department said on Monday that taxpayers should submit tax returns by July 15th, and if more time is required, they should request an extension to October 15th.
Tax experts have advised millions of recommendations that have not yet been submitted.
Collect your tax documents together
Tax experts say the first step is to collect tax documents for 2019.
Bill Smith, managing director of the CBIZ MHM National Taxation Bureau, pointed out that checking the tax return of the previous year can help you determine whether anything is missing. Most tax documents (such as bank or mortgage tax forms) are now available online, but please plan ahead to ensure that you are not surprised by the documents lost in the last minute.
He said: “Get a psychological checklist, “This is what I reported last year” and “Do I have this document this year?”
Are you going to file your taxes before July 15th?
If you realize that you are not ready to submit your application before July 15, you can choose to submit an extension, which will provide you with another three months to file your tax return.
But there is a trap: even if the extension allows you to submit documents before October 15, you must still pay all taxes owed before July 15.
Smith said that if you do not pay the IRS before July 15, you will face a fine even if you file an extension request.
However, non-payment of fines is more difficult than non-payment of fines. The US Internal Revenue Service will give you a 5% fine for “not to file” for up to 5 months, with a maximum penalty of 25%. The monthly fine is less than 0.5%, and the maximum can reach 25%.
“If you are fined, it will only get worse every month,” Smith pointed out.
Using IRA, HSA expansion
The IRS says that taxpayers must also make payments to their IRA or health savings account or HSA before July 15 for the 2019 tax year. In a typical tax year, the deadline for these donations is April 15.
If you can deposit more money into your IRA before July 15, you can improve your tax situation. For 2019, taxpayers under the age of 50 can contribute up to $6,000, while taxpayers over the age of 50 can contribute up to $7,000. Although contributions to traditional IRAs are tax deductible, Roth IRA is not deductible, although you can withdraw funds in a tax-exempt manner for senior citizens. Donations to HSA can also be tax-free.
If you are unable to pay taxes, please understand the various options
Finally, if you cannot pay the taxes owed, you can choose some methods, Credit Karma Tax’s Taylor said.
Taylor pointed out: “There are far more people in trouble than before COVID happened.” Some of the taxpayers may want to make a “compromise offer” to the IRS, which allows taxpayers to repay tax debts in a way that is less than the arrears. .
However, unless the taxpayer is eligible for a low-income exemption, the application fee is $205. The IRS will determine whether they accept lower quotations based on your income, expenses and other financial data.
Finally, you can choose to set up a payment plan through IRS, which provides short-term or long-term plans. The short-term plan requires repayment within 120 days and free registration. There are some set-up fees for long-term plans, such as online applicants need to pay 31 US dollars, and it is suitable for people who can not repay their debts within 120 days.
Aimee Picchi is a business journalist whose work has appeared in publications such as “USA Today”, “CBS News” and “Consumer Report”. She spent almost ten years reporting technology and media for Bloomberg News. You can find her on Twitter @aimeepicchi.
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