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How COVID-19 is Affecting Tax Season [In Collaboration]

By June 11, 2020 No Comments

COVID-19 has caused a lot of important conversations and concerns over the past few months. Between government legislation, schools and universities closing, and workplaces changing procedures nearly every week, filing your taxes may be fairly low on your list of things to keep track of. However, as is the case with most industries having experienced rapid changes, so has important information in regards to filing your 2019 taxes.

This guide will help you stay up-to-date on important ways that the COVID-19 virus has affected taxes, such as HSAs, IRAs, and deadlines. While there are a lot of important things to keep in mind during the global pandemic, your crypto taxes are something you don’t want to forget about.

1. Federal Tax Deadline

Arguably the most important update to remember is the federal tax deadline for individuals and those that are self-employed has been moved. Instead of the typical deadline of April 15, 2020, the IRS will allow for deferment without interest or penalty up to 90 more days. That means July 15, 2020 is the new deadline to submit your 2019 federal income taxes.

According to the IRS, “Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief.” That means no additional paperwork is required and no need to worry if you weren’t able to file in time for the original April deadline.

While government officials have been considering other extensions for potential deadlines, July seems to be the one you need to know for now. As with all other topics during the pandemic, it is important to keep an eye out for any additional updates that may come as more information is gathered by officials.

2. State Tax Deadlines

Federal tax deadlines were not the only deadlines to be affected by COVID-19. Many state deadlines have been altered as well. State officials, of course, have reacted differently to the crisis in various states. So as you might expect, states’ individual tax policies often reflect those differences.

The state of California announced its state deadline will be the same as the updated federal deadline and will also postpone taxes and fees for 2020 LLCs. New York is also in line with the federal deadline. The state of Hawaii has extended their state tax deadlines beyond the federal date to July 20, 2020. 

To check how COVID-19 has affected your state’s tax policies you can refer to this list of state tax agencies. 

3. What About My IRA?

Overall, 2019 was not a bad investment year, however, if you didn’t get as much saved for retirement as you would have liked, there’s no need to worry! Along with the extension of the tax deadline comes the extension for 2019 IRA contributions. July 15, 2020 is also the date to remember for your contributions.

To avoid confusion, it is recommended that you contact the brokerage firm handling your IRA to let them know any contributions you make are for the 2019 fiscal year. 

If you aren’t sure what an IRA is or whether you have/want a traditional or Roth IRA, check out this article! Both are great options and despite the seemingly endless volatility on Wall Street, it is important to continue to think about retirement and what kind of investments will be best for you.

4. Health Savings Account (HSA)

HSAs have widely grown in popularity over the years and provide many Americans with the freedom of choosing how much they contribute each year towards future medical expenses. For many, an HSA is an excellent choice for a health insurance plan.

COVID-19 has been a reminder to many that saving for medical expenses is becoming increasingly important. Typically the maximum annual contribution for an HSA is $3,500 for a single individual. If you have dependents, your contribution limit will be higher of course. If you have not reached your limit for 2019 contributions you may continue those contributions until the new tax deadline of July 15.

 5. Time to File!

There is no doubt that the unprecedented nature of the COVID-19 crisis has caused unprecedented changes in almost every aspect of life. Now that you know how the virus has affected your taxes, it’s time to get them done. Make them as easy on yourself as possible. There’s no need to complicate your time more than you have to.

Here are a few suggestions and resources to help you simplify your taxes:

  • FileThis helps keep track of your financial documents throughout the year.
  • MileIQ can track your miles if you are self-employed.
  • Mint.com can help you prepare to submit your investment portfolio.
  • If you’ve diversified into cryptocurrencies, try TaxBit to weed through new crypto tax law.

 

Whatever you do, start sooner rather than later. You’ve got other things to think about other than your taxes.