How to Approach Your Taxes Amid COVID-19 Outbreak

A young professional man sitting at home in front of his computer and doing his taxes.

During this COVID-19 coronavirus outbreak, each day brings new developments and changes to our day to day lives and activities. These are uncertain times and many Americans are dealing with job losses or reductions in income for the foreseeable future as many states are participating in a number of social distancing measures in an attempt to slow and reduce the impact and spread of the coronavirus. It is easy to be consumed with the latest headlines and fall behind on your pending to-do list. However, when it comes to filing your 2019 tax return the sooner you do the better.

File Soon and Avoid a Strained System

The Internal Revenue Service and Treasury have announced that all federal income tax deadlines will automatically be extended from April 15th to a new due date of July 15th; it is not necessary to file an extension at this time to extend your due date. While this may be a welcome relief to many taxpayers that have not yet prepared or filed their 2019 income tax returns, you should still consider filing your return soon. Due to the many uncertainties revolving the coronavirus and its impact on businesses and the overall economy, it may be in your best interest to file your return sooner rather than later.

The reality is the coronavirus has caused many businesses to scale back or shut down completely, as well as a number of government offices being forced to reduce staff to combat the spread of the virus. The IRS is already a system that suffers from routine budget cuts and must work largely understaffed under regular circumstances. The impacts of the coronavirus are sure to be felt within the IRS if not being felt already. This will lead to a possible delay in refunds down the line as more and more people are in need of extra funds and will file their returns to receive their tax refunds.

Filing Later Means Less Access to Funds

Many individuals are facing economic hardship as a result of the coronavirus in the weeks to come. With companies laying off employees and small businesses being forced to shut down, individuals will need to access emergency funds and savings accounts to cover the shortage in their current income. If you are entitled to a tax refund this year, filing your tax return soon can give you access to extra funds in a few short weeks. Most federal tax refunds are directly deposited to your preferred bank account about 3 weeks from your filing date. If you know you will be short on funds in the coming weeks it is best to think ahead and contact your tax preparer to begin the process of filing your income tax return.

Time at Home Means More Time to Prepare

Close-up shot of IRS paperwork like 1040 and W-2 for taxes.

Now is the best time to begin to organize your financial records and paperwork that will be needed by your tax professional to prepare your tax return. Use this extra time at home to track down and categorize any documentation pertaining to your finances for 2019 to ensure your tax professional can complete your return in a timely fashion. Making the extra effort to provide accurate and reliable records will allow your tax preparer to file your return quickly and avoid possible delays through the IRS. Most returns are eligible to be filed electronically and by choosing to direct deposit your refund you will have the fastest access to your funds.

Use Your Refund as an Emergency Fund

Even if you are still able to work and continue to earn your regular income it would be wise to file your taxes in a timely manner and ensure access to your refund sooner rather than later. If you are still employed you may not be feeling the effects of the coronavirus crisis on your finances at the moment, but most individuals will be impacted in some way. With the economy taking a sharp downward turn, investments are losing value quickly, and consumers are tightening their spending habits. If you know you will be receiving a refund this year it is best to file your return and receive your refund which you can use as an extra safety net to cover any unexpected expenses or losses in the weeks and months to come.

Even If You Must Pay Taxes Do Not Delay Filing

The reality is not everyone is entitled to a refund so many are considering delaying the filing of their taxes until July 15th to prevent having to make payments until then. The good news is even if your tax professional files your taxes now and determines you will owe the government money, you are still able to extend your payments of those taxes until July 15th. If you wait to file your return until the deadline of July 15th your taxes will be due immediately regardless of the amount. Prepare your return now and give yourself time to make arrangements if needed to fulfill your tax obligations.

We recommend that those individuals in this situation file their 2019 tax return soon for two main reasons. One, the sooner your tax professional prepares and files your return the sooner you will know exactly how much you owe. Secondly, once you know the amount of money you will have to pay the IRS you can plan accordingly for the months to come to ensure you complete all necessary payments by July 15th and avoid any interest or penalties that would be assessed if you file later and are unable to make a lump sum payment by the July 15th due date.

How Can Porte Brown Help You?

At Porte Brown we are ready and available to assist you in the preparation and filing of your 2019 tax return as quickly as possible. We understand this is a difficult and uncertain time for you and your family and we are here to help you stay on top of your tax needs with our team of experienced and knowledgeable tax professionals. Contact our office to begin the process of filing your 2019 tax return.

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