Are you just starting your taxes for the 2020 tax season? If you’re panicking, don’t—we’ve got good news. The tax deadline typically falls on April 15, but this year, the IRS has extended the tax deadline to May 17 due to the pandemic.
So what does this mean for you, exactly? We’ll break it down for you.
Is the Tax Deadline Extension for Everyone?
The 2020 tax year deadline postponement applies for individual tax payers and those who pay self-employment taxes. While the IRS has extended the federal tax deadline, this does not apply to the state tax deadline. It’s worth checking your state tax deadline to make sure you’ll ready to go.
What About Quarterly Estimated Tax Payments?
Are you a freelancer? Do you own a business? That means you’ll have to make quarterly estimated tax payments this year. Unfortunately, this tax deadline does not apply to estimated tax payments. According to the IRS website, here are the deadlines:
- If your payment period was January 1 – March 31, your tax deadline is April 15.
- If your payment period was April 1 – May 31, your tax deadline is July 15.
- If your payment period was June 1 – August 31, your tax deadline is September 15.
- If your payment period was September 1 – December 31, your tax deadline is January 15, 2021.
What Should I Do Before the Tax Deadline?
If you were a bit behind on filing your taxes this year, the good news is you have a bit more time. Here are some things you should do before this year’s tax deadline comes around.
Make Sure You Have Everything—Yes, Everything
If you haven’t already, now’s the time to get all your documents in one place. And yes, we mean everything. When it comes to your taxes, you don’t want to leave anything out. It could cause a huge headache later on.
Make sure you have the following:
- Personal information for both you and your dependents
- Income and investment documents
- Medical bill receipts
- Business and self-employment records
- Charitable donations
- Homeownership records
Decide If You’ll Do Your Taxes Yourself or If You’ll Hire a Professional
Taxes aren’t easy. And they can take a lot of time. If you don’t have a whole afternoon to dedicate to doing your taxes, you might want to hire a professional to do them for you. It could be nice to have someone who has a sound understanding of tax rules and regulations to take care of your taxes for you.
But if you can’t fit the expense of hiring a professional into your budget, you can definitely do your taxes yourself. A lot of people file their taxes themselves, so why can’t you? Luckily, there are a lot of tools out there that’ll help you file your taxes for free.
Whichever you decide, make your choice now. You want to get started a few months in advance of the tax deadline, just in case. Better safe than sorry!
Make a Plan for Your Tax Return
No matter how much you’ll get in your tax return, it can’t hurt to have a plan for how you’ll use it. Due to the financial uncertainty from COVID-19, it couldn’t hurt to put a good amount of your tax return in your savings. And since unemployment is on the rise, it could be a nice cushion to fall back on if you find yourself without a job.
Your tax return could also come in handy if you have any major bills to pay. No matter how you decide to use your tax return, make sure you use it in a way that’s useful to you.
The Bottom Line
Take advantage of the 2020 tax deadline extension. It’s not an excuse to put off your taxes later, but it is a great opportunity to give yourself a little more time to complete your taxes. If you want to learn more about how COVID-19 can impact your finances in general, check out our COVID-19 Financial Resource Guide.
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