The pandemic situation has made things tough for everyone, with millions of people facing pay cuts and many on the brink of job losses as well. Things are not really great on the tax front as well, except for the fact that the deadline has been extended to July 15. So you may be probably relieved that you can skip the visit to your tax professional for a few weeks at least. Still, you must make sure that you are all set to file and pay your taxes on time, despite the extended deadline because not doing so can land you in trouble.
However, things can get a little complicated in the light of the new coronavirus relief law and the tax implications related to stimulus payments. Awareness will help while getting guidance from an expert is equally important. The idea is to get set with the paperwork, calculations, and filing formalities on time. Here are some key facts you should know about taxes amid the pandemic.
Electronic transfer is the best option
Right now, submitting your documents to your tax professional online makes sense because this will enable them to prepare your returns well before the deadline. This means that you won’t have to visit their office personally, which surely is relevant in the period of social distancing. The best part is that professionals too are comfortable with the idea of doing things remotely because it will avoid the last-minute rush and keep them and their employees safe as well.
Electronic filing is the way to go
While contactless electronic transfers will cover you to a major extent for sharing the documents and getting your returns ready, electronic filing will get things sorted out when the due date comes. The IRS routinely emphasizes its preference to receive the tax returns through the electronic filing mode. Also, the adoption of this mode has seen a surge in recent years, which shows that the taxpayers have been equally keen about using it even before the pandemic era. So there won’t be any big issues on this front at least.
Filing quickly will get you to refund faster
Even though you may be happy about the deadline being moved to July 15, delaying your return is not the best thing to do. Rather, the later you do it, the longer it will take for your refund payments to come. Right now, any extra cash receipt would help, so even your tax refund can be useful if you get it on time. Another reason why you mustn’t delay filing is that your coronavirus stimulus amounts will be determined by the income you report on your tax returns.
Be ready if you expect an audit
One of the most serious tax concerns is an impending audit. Pandemic or no pandemic, you need to have a strategy in place if you are expecting an IRS audit this year. The process can be painful, time-consuming, and stressful, which makes it the last thing you need right now. If this is the case, you should get in touch with an expert tax attorney and discuss your situation right now. They can guide you about avoiding further errors and ensure that you have all the documents in order when they will be needed for negotiating in the future.
Be aware of the state taxes
While there is clarity about the delayed deadline for federal taxes, things can get a little confusing when it comes to state taxes. Each of the states has its own requirements and you need to be aware of the one you operate from. In fact, you may actually encounter two tax deadlines at one time, one for the federal taxes and the other for the state where you live. Still, the idea is not to miss the deadline for the state taxes because you wouldn’t want to get into a fix with the state authorities just as with the IRS.
What if you have to file online by yourself?
Though there are chances that your tax professional would work remotely, you may want to file online yourself. Things can be a little tricky if you are doing it for the first time, but here are some tips you can use:
- Read the instructions carefully before starting
- There are website help features to guide you or you may check the rules about deductions and credits
- Your 2018 return is good enough to get guidance if there hasn’t been a major change in your life, such as starting a new business, getting married or selling a bunch of stocks
- Re-check the entries before submitting
Despite the stress and strain of COVID and the advantages of stimulus and delayed tax deadline, you must take your taxes seriously this year. A responsible approach will surely save you from a lot of trouble.
