The coronavirus is upending all aspects of life in the U.S. in early 2020, but finally there’s a bit of good news. Treasury Secretary Steven Mnuchin announced a few days ago that taxpayers will be getting a break in the form of a 3-month reprieve in filing federal taxes. Instead of the familiar April 15th deadline, this year taxpayers will have until mid-summer to get their returns filed.
IRS Update: Relaxation of Tax Deadline Part of COVID-19 Response
This CNBC story by Darla Mercado was one of many that broke the news. Her story reports that “Taxpayers will get a three-month reprieve to pay the income taxes they owe for 2019, Treasury Secretary Steven Mnuchin said on Tuesday at a news conference.” Flanked by President Trump, the Secretary announced this delay as part of the fed’s response to the upheaval caused by COVID-19.
“As part of its coronavirus response, the federal government will give filers 90 days to pay income taxes due on up to $1 million in tax owed,” CNBC reports. “The reprieve on that amount would cover many pass-through entities and small businesses, he said.” Taxpayers won’t be subject to interest and penalties during this added 90-day window.
IRS Update: If Your State Collects Income Tax, Better Check Local Rules
Both Mnuchin and CNBC cautioned that state rules may be different. Washington State, the home of AgingOptions, does not require income tax – one of only seven similar states nationwide. (The others are Alaska, Florida, Nevada, South Dakota, Texas and Wyoming.) “Some states have rolled out [filing] delays due to coronavirus,” said CNBC. “California is granting a 60-day delay for affected individuals and businesses unable to file on time. Meanwhile, Maryland is giving additional time for certain business tax returns, and the state will grant an extension to individuals if the federal government moves forward on its delay.”
The American Institute of CPAs has a complete, up to date list of state rules here in case you or a loved one are affected.
In spite of the extra time being allowed by Uncle Sam, the sooner you file, the better, if you’re among the majority of taxpayers with a refund coming. As of March 6th, according to CNBC, the IRS had processed more than 65 million income tax returns, of which nearly 53 million had tax refunds coming. The average refund: $3,012. That’s up from $2,929 last year.
IRS Update: Here’s When You Can Expect Your Refund
But let’s say you’re one of those 65 million taxpayers, and you’re still waiting for that check. How soon can you expect it?
Reporter Christy Bieber, writing in the Motley Fool on February 23, says $3,000 is “a big chunk of change that could be used to repay some debts, bulk up your emergency fund, or take a vacation with your loved ones.” Bieber adds, “But when exactly will you be able to get your money from the IRS? It depends on how you file your tax forms, how you request the refund, and whether or not you’re claiming certain credits.”
If you haven’t filed yet, there are two tools you should use to speed things up: e-filing and direct deposit. “If you e-file and have the refund deposited directly into your bank account, chances are good you’ll have it within 21 days after your return has been accepted,” says Motley Fool. “Nine out of ten refunds are sent on this timeline.”
IRS Update: Snail-mail and the Earned Income Tax Credit Will Slow Things Way Down
If you really want to slow things down, this is one time when “snail mail” lives up to its name. “If you mail in a paper return, you’ll be waiting quite a bit longer” – at least twice as long on average, the article states. “It takes between six and eight weeks for your refund to be processed after the IRS receives your 1040 form.” If you claimed either the Earned Income Tax Credit or Additional Child Tax Credit, says Motley Fool, your refund may be delayed even more. Under IRS rules, refunds for taxpayers who claim those credits cannot be issued until mid-February at the earliest, so your return may be caught in the backlog.
No matter how you submit your return, there’s a quick way to check on its status. “Once you’ve submitted your tax forms, you can use Where’s my Refund to check when your money is likely to arrive,” says the Fool article. Enter your Social Security number, your filing status, and the exact amount of the refund you expect, and the status of your funds will be instantly displayed. Just be patient while you wait. Motley Fool warns against any service that promises an advance on your refund. Between fees and interest, it’s a foolish and expensive way to get your money a few weeks early.
Use Tax Season as the Season to Get Serious About Retirement Planning
Tax season is a good reminder to examine your financial situation to make sure your strategy on saving, spending, investing, and paying taxes is appropriate for your age and situation. But may we also remind you that this is the ideal time to be thinking more strategically? Retirement planning means laying the groundwork for your senior years in a way that you can enjoy life with fruitfulness and security, with assets well-protected and your medical, legal, housing and family needs well-met. Here at AgingOptions our term for this type of comprehensive retirement planning is LifePlanning. It’s the most exciting and thorough approach to retirement planning we know of!
So why not take a simple next step and join Rajiv Nagaich at an upcoming free LifePlanning Seminar? We hold these events in locations throughout the region and the calendar is being continually updated. Find out more on Live Events page. Meanwhile, take care – and “Age on !”