We're normally not talking about taxes in the summer, but taxpayers across the nation have until Wednesday, July 15 to either file their taxes or file an extension. Either way, Zinner & Co. Partner Brett Neate said taxpayers have to pay what they think they owe.
"Some people have the misconceptions that an extension to file is an extension to pay, which it is not," Neate said.
For taxpayers who are still short on cash because of the coronavirus, Neate said they should reach out to the IRS to work out a payment plan.
"They're pretty easy to set up," Neate said. "The worst thing to do is to just to ignore it and not communicate with the IRS to coordinate the payment of that liability."
The nationwide extension from April to July gave Americans more time to pull their tax information together but also to get enough money to pay their taxes.
"Definitely, some people got a few extra months of cash flow, which helped," said Pinnacle Accounting Founder Jake Mitrovic.
Taxpayers should also be keeping good records because many household and business finances got very complicated in 2020. Stimulus checks are not taxable income, but state and federal unemployment benefits are subject to taxes for individual taxpayers. Paycheck Protection Program (PPP) loans also have the potential to complicate a business' tax liability for the taxes due in April 2021.
Neate recommends considering a decrease in estimated payments for the first two quarters of your 2020 taxes, especially for people who were laid off or furloughed.
Just be ready to revisit those estimates later in the year to avoid a huge tax bill in April 2021.
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