Sure, we thought the chaos and confusion of last year’s tax season was long behind us.
This year, they told us, was bound to be better as people became more familiar with the new tax rules that initially showed up on 2018 tax returns.
Then the coronavirus crisis took hold in the United States. And 2020 tax season has become more confusing by the minute.
Now, the April 15 deadline for filing and paying your taxes has been extended to July 15. But you might not want to wait that long, especially if you’re owed a federal income tax refund. The Internal Revenue Service said most tax refunds are still being issued within 21 days.
Here’s a look at key tax questions in light of the coronavirus pandemic in 2020:
Q: How can extending the federal deadline to July 15 help me?
A: Taxpayers who owe money would be able to defer federal income tax payments that would have been due on April 15 to July 15. And you would not get slapped with any penalties and interest, regardless of the amount owed. It buys you 90 days and saves you some money.
Q: Can the IRS give me information on stimulus checks?
A: The IRS has a special page at www.irs.gov/coronavirus. It stated that most people do not need to sign up to get these checks. The page will be updated regularly. The IRS says: “Please do not call the IRS about this.”
Q: Can I wait to make contributions to my IRA or Roth IRA?
A: Yes. “Because the due date for filing federal income tax returns has been postponed to July 15, the deadline for making contributions to your IRA for 2019 is also extended to July 15, 2020,” the IRS said.
Q: Can I get my taxes done now?
A: Yes. Many tax services remain up and running. Your CPA is likely working remotely. H&R Block offices remain open, but many are using primarily drop-off services.
Even though the federal income tax deadline has been extended 90 days, people still want to get their tax refund cash as soon as possible. Those who face layoffs, reduced hours on the job and loss of gig work need to file a 2019 tax return to get tax refund money soon.
“Although Tax Day is now July 15 due to the coronavirus pandemic, the IRS is still accepting returns and processing refunds,” said Susan Waldron, a spokesperson for H&R Block. “Refunds are vitally important for millions of households now more than ever.”
Jackson Hewitt advises customers to first call and see if a local office is open and ask about the hours. It offers a variety of ways to reduce time in an office including dropping off documents. But changes were made as well: “We are no longer accepting walk-ins if there is a wait in order to prevent people from congregating in a lobby.”
Q: What are free online options for filing taxes?
A: This could be the year you want to try “Free File.” Hardly anyone uses it — less than 2% of those eligible — but it’s a good option, especially if you have time on your hands and want to save money.
Go to www.irs.gov and look into “Free File.” Roughly 70% of taxpayers would qualify for some services offered, as measured by adjusted gross income. If your adjusted gross income is $69,000 or less, you’re eligible to participate in the program. The tax software providers may target certain groups by age or income. But one provider will offer services to fit your circumstances if your income is $69,000 or less.
Q: Can I walk into an IRS office and get help?
A: No. “The IRS has temporarily suspended almost all face-to-face contacts with taxpayers,” according to a notice issued by the IRS on March 24. “All Taxpayer Assistance Centers are closed and face-to-face service discontinued throughout the country until further notice.”
The IRS is working to resolve some issues by phone if taxpayers already had scheduled an appointment at a taxpayer assistance center.
Q: Are there other reasons to act by April 15?
A: Yes. Did you miss out on a tax refund because you did not file a 2016 tax return? To cash in, taxpayers will need to file a 2016 federal income tax return by April 15. That deadline wasn’t extended. Otherwise, you lose the chance to get that unclaimed refund for 2016 for good.
Some of the unclaimed refund money could belong to students, part-time workers and others who may have overlooked filing a return.
“There is no extension of the April 15 deadline to file a 2016 federal return to obtain a refund,” said Marshall Hunt, a certified public accountant and director of tax policy for the Accounting Aid Society’s tax assistance program in metro Detroit.
If you have estate and gift taxes, for example, the April 15 deadline still remains in place.
Q: What happens if I already filed my tax return and paid my taxes due for 2019?
A: If you already wrote a check to pay your taxes, you’re not getting that money back, even for a short term. The new 90-day extension doesn’t help you now.
“But they (taxpayers who’ve already paid) can take some comfort in knowing that their taxes are one less of the many issues that we’re facing today,” Hunt said.
For some early filers, there is a way out if you had already authorized an automatic electronic withdrawal of the money for April 15.
Your payment isn’t going to be automatically rescheduled to July 15. But the IRS notes in its filing and payment deadlines Q&A that there may be ways to cancel and reschedule your payment until July 15.
“If you scheduled a payment as part of filing your tax return (authorizing an electronic funds withdrawal), you may revoke (cancel) your payment by contacting the U.S. Treasury Financial Agent at 888-353-4537. You must call to make a payment cancellation request no later than 11:59 p.m. ET two business days prior to the scheduled payment date,” the IRS said.
“If you scheduled a payment by credit card or debit card, contact the card processor to cancel the card payment,” the IRS said.
Susan Tompor is the personal finance columnist for the Detroit Free Press. She can be reached at stompor@freepress.com.