Tax Extension Updates for 2020: What You Need to Know

Tax Extension Updates for 2020: What You Need to Know, seniors consulting with CPANew updates on filing this year’s taxes have just been released. Due to the effects of COVID-19, the IRS is issuing a 90-day extension to individuals and businesses that owe additional income tax for 2019. That means you will have until June 15 to both file and pay your state taxes.

Taxes are normally due on April 15. With the recent revision to the tax deadline, you will be able to defer payments without incurring interest or penalties. Although these extensions have been granted to accommodate the current pandemic, the IRS doesn’t want you to wait until the last minute to file.

“We encourage those Americans who can file their taxes, to continue to file their taxes on April 15 because many Americans will get tax refunds. We don’t want you to lose out on those tax refunds,” Treasury Secretary Steven Mnuchin told CNN.

Additional Tax Changes

On top of this recent extension, there are several other tax changes you should be aware of before filing this year. 

Income Tax Bracket

Tax rate increases will apply for your 2019 taxes. Due to inflation, the income tax bracket has increased. In some cases, the cost difference may be as little as a few hundred dollars. In other cases, like changes in income or marital status, you may see a larger difference.

Higher Standard Deductions

Instead of itemizing every deduction, you can now opt to take the standard deduction amount. Although it saves you time while filing your taxes, it’s important to also consult with an experienced CPA to determine whether you should take the automatic reduction.

Health Care

If you did not have healthcare during the 2019 tax season, you will no longer receive a penalty. Previously the fee was $695. This change can save you money, but it’s a wiser decision to make sure your health is a priority. Consider speaking with a professional about options for your care.

Related Article: How To Get A Tax Deduction From Investing In Your Health

Medical Expense Deduction

If you had medical expenses in 2019, your medical deduction threshold has changed. You will now only be able to deduct unreimbursed medical expenses above 7.5% of your adjusted gross income.

Estate Tax Exemption

If you own properties or assets, you may be paying fewer taxes than last year. Effective for the 2019 tax year, you can own up to $11.4 million in assets before you are required to pay federal estate or gift taxes. In 2020, that amount increased to $11.58 million.

So How Can This Change Help You?

Depending on your current financial situation and tax responsibilities, the IRS extending the tax filing date can give you more time to get your documents in order. Additionally, you will still be able to request a six-month extension to file returns, like you would in any other year. Find out how to file for an extension by reading our blog on how to get on extension.

If you have questions on filing your taxes or applying for a tax extension, contact us at 951-686-3608 to find out how we can help. 

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