*I am not a tax professional. Therefore, based on your individual tax situation, a tax professional should verify the information provided in this series.
They say that the only two certain things in life are death and taxes.
Taxes are inevitable.
These past few years have been unique ones with the rent moratorium, mortgage forbearance, student loan deferrals, stimulus, and natural disasters that have occurred.
When it comes to taxation, there is a lot to consider. For example, there are additional timeline extensions for those serving abroad and those affected by natural disasters.
Some people with a level of simplicity in their taxes can use a free tax filing program like TurboTax. However, if you have any complexity to your taxes, I recommend hiring a professional to ensure that you are taking advantage of all tax provisions available to you.
I use a tax team to handle both my personal and business returns. They handle any extension requests via the Form 4868, ensure I prevent any penalties, and ensure that I am proactive instead of reactive in handling my taxes.
For many people, an extension can be granted.
Per The IRS, “An extension of time to file your return does not grant you any extension of time to pay your taxes. You should estimate and pay any owed taxes by your regular deadline to help avoid possible penalties. You must file your extension request no later than the regular due date of your return. Filing this form gives you until October 15th to file a return. To get the extension, you must estimate your tax liability on this form and should also pay any amount due.”
The form they are referring to is the Form 4868, which you can file individually or have your tax professional handle for you. Here is a link to the Form 4868.
There are many people––close to 10 million or so––that file for an extension each year. Now, this extension typically gives you the ability to extend the tax filing deadline to October 15th (on a typical year). But it does not permit you to forgo any taxes due by the original filing date or to extend the deadline to maximize your IRA contributions, which are $6,000 for 2020 or $7,000 for those catching up above the age of 50. The due date of this is the regular April 15th date.
There is a lot of talk about tax reform coming next year, which we will cover when the full tax plan is released, but this will be a starting point to go off of to ensure that you are preparing to the best of your ability today.
Simply make sure that you have a plan to file your return on time, utilizing a free resource like TurboTax or seeking out a tax professional to handle your return.
Additional Resources
The Pros and Cons of Filing a Tax Extension: https://www.thebalance.com/tax-extension-pros-cons-3193185
Tax Relief in Disaster Situations:
https://www.irs.gov/newsroom/tax-relief-in-disaster-situations
Extension of Time To File Your Tax Return:
https://www.irs.gov/forms-pubs/extension-of-time-to-file-your-tax-return
