It’s Tax Time

By Willow Editorial Team

The clock is ticking: July 15th is the revised (and final) deadline for the following tax-related actions:

 

Filing your 2019 personal federal income tax return

If you still need more time to prepare your 2019 return, whatever you do, don’t do nothing as failing to file will be much more expensive than failing to pay. Rather, request an extension (Form 4868), and get yourself an additional three months to file. Your new deadline: October 15, 2020.

 

Paying what you owe Uncle Sam

Remember: an extension only gives you more time to file; not more time to pay. You’ve got to pay the government your best estimate of what you think you owe by July 15th to avoid penalties and interest.

 

Can't afford to pay your balance in full? The IRS offers reasonable long-and short-term payment plans. You may even be able to settle the bill for less than you owe (This is called an offer in compromise.) or request a deferment until you can make a payment. 

 

Keep in mind, though, that offers in compromise and requests for deferment require additional paperwork and must be approved by the IRS.

 

Paying your first and second quarterly tax estimates

If you pay estimated taxes (You work as a freelancer, independent contractor, etc.), your first two quarterly estimated tax payments, which are normally owed on April 15th and June 15th, respectively, are both now due on July 15th. This is in addition to any money you owe for tax year 2019.

 

Making 2019 contributions to IRAs and HSAs

One of the more interesting provisions of the extended tax deadline is that it also extends the ability to make 2019 contributions to individual retirement accounts (IRAs) and health savings accounts (HSAs). Take advantage of this!

 

For the 2019 tax year, the traditional IRA contribution limit is $6,000 for eligible individuals under 50; $7,000 for people 50 and older. 

The 2019 HSA limit is $3,500 for eligible Americans with individual health coverage; $7,000 for family coverage.

 

Willow's Personal Finance Analyst Vera Gibbons shares some expert tips with Good Morning America for those that are social distancing and want to file online, and for those who plan to still file by July 15th and want to avoid penalties.

 

 

Take the First Step Today!


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