The new tax deadlines are just one of many examples of how 2020 is a year unlike any other. And although these tax payment delays were announced in March, the changes are still causing some confusion for taxpayers. But that’s why we’re here to help!
After we recap the key differences for this year’s tax due dates, we’ll run through a few different ideas that might prove useful during this extended tax season—especially if you still haven’t finalized those 2019 tax return plans. If you have any questions about what types of tax strategies might make the most sense for you, your business, or your family during this time, please don’t hesitate to reach out.
Implications of the July 15 Tax Day
In addition to an unusually long tax season, there are a few other items that make this year’s taxes unique. The following updates are worth noting for both individuals and families, as well as corporations:
Individual Payments
The tax return Form 1040 isn’t the only due date that has moved in 2020. This year, individuals are allowed to defer up to $1 million in payments. If you owe money to the IRS, that deadline for paying will also be July 15.
Estimated Tax Payments
Individuals can even defer this first quarter estimated tax payments for 2020. Rather than the standard deadline, those payments are now due by July 15. Be sure to note, though, that this delay is only applicable to individual tax payments. Corporations were still expected to make their estimated payments as usual for the 2020 year.
Corporation Payments
Tax returns for corporations are in a similar situation to individual tax returns this year. IRS payments of up to $10 million have also been pushed back 90 days, giving corporations more flexibility with their accounts. This change was designed to help free cash flow to better protect companies and their employees. There will be no penalties or interest payments due for those that opt for the later deadline.
Other Tax Strategies for the 2020 Year
While tax planning is crucial every year, 2020 presents some interesting opportunities. For example, the CARES Act is still in the process of sending out stimulus payments. If you have yet to receive yours—and you still haven’t finalized your 2019 tax return—you may want to think about how those records are organized. Removing a dependent over the age of 16 could allow them to collect their own $1,200 stimulus payment from the IRS, rather than the standard $500 payment for dependents.
Another option some people might be interested to know about is the process for penalty-free withdrawals from their retirement account this year. While this may not make sense for everyone, those who decide to move forward can avoid the 10% penalty for early withdrawals on up to $100,000. You would then have three years to pay the income tax on your withdrawal. It just requires the right planning to make sure you’re moving forward with the right decision.
Considering all of the possible strategies with your accountant is always a smart way to safeguard your finances. If you have other questions about how to navigate your 2019 tax return or how to plan for the years ahead, just call our team at NSO and Company to discuss the steps that will be right for you!