Today TaxMama® wants to provide some tips before the upcoming July 15th filing deadline.
I hope you’re able to enjoy (what we used to call) a “safe and sane” 4th of July holiday. When arriving in Los Angeles many decades ago, we used to have colorful booths all over town, selling fireworks, using that slogan. With high levels of fire danger around here, those booths are gone, and fireworks are not welcome in Los Angeles anymore. (Though I am sure we are seeing them around our neighborhood lately.)
Moving on to other topics – another round of COVID19 loans will probably be approved. Please understand the distinction between the PPP loans that you get through your bank, and the EIDL loans that you get directly from the SBA.
The EIDLs are real loans that must be paid back. These loans do not include a forgiveness provision. And if you accept a loan over $25,000, the SBA will file a lien against your business, including all intangible assets. The terms include a variety of significant restrictions and conditions – so READ your loan agreement carefully before signing.
The PPP Loans are the ones with the forgiveness provision. And the SBA does not file a lien against the business.
The upcoming July 15th filing deadline
Getting an extension of time to file your tax returns does not give you an extension of time to pay the taxes that are due. You still have to pay a variety of taxes that were deferred and are rapidly coming due:
- 2019 IRS balance due and the state
- 2019 IRA, Roth IRA and HSA or MSA contributions
- 2020 1st quarter estimated tax payments
- 2020 2nd quarter estimated tax payments
That can add up to a LOT of money, if you have been taking advantage of the extra time and not paying any of those balances – or if you have been unemployed and don’t have the funds.
If you still cannot come up with enough money to cover it all – what should you prioritize?
The 2019 IRA, Roth IRA and HSA or MSA contributions – there is no extension for those – so the only way you can get those deductions is to fund these accounts by July 15th.
What about all those 2019 balances that are due?
Here is a form hardly anyone knows about! Form 1127 – for additional time to PAY taxes without incurring penalties. You can use it in hardship situations – and this year certainly qualifies! https://www.irs.gov/forms-pubs/about-form-1127
In the meantime, you can get additional time to file your 2019 personal, corporate and certain trust returns.
For both the 1040 series (Individual Income Tax Return) and the Form 709 (Gift and Generation Skipping Tax Return) – file Form 4868 by July 15th .
For pretty much all other eligible entities, file Form 7004 by July 15th .
Note: Extensions for calendar year partnerships and S Corporations should have been filed by March 15th .
I am sure you have a lot of questions
This is a tough year – and we are going to help you. We = Andy at Pronto Tax and the team at Lambers. My friends and I have set aside two hours on Wednesday, July 8th – a whole week before the filing deadline – to answer your questions. So please, join us. It’s free. https://iTaxMama.com/SpecialRoundTableWebinar
Watch out of another deadline – 2016!
If you still haven’t gotten around to filing that year’s tax return – you were given 3 extra months to get that year filed – before you lose your entire refund. Instead of April 15th – you were given until July 15, 2020 to file your 2016 tax return and claim your refund.
The IRS says that $1.5 BILLION is sitting there unclaimed.
What are you waiting for? If you still can’t get the specific numbers you need in order to file – use reasonable estimates and explain how you arrived at those numbers. Don’t wait.
File IMMEDIATELY! That will protect your refund. You will then have up to 3 years to amend and provide documentation. And if you do need that documentation – get to work right now to get it, to preserve your share of that $1.5 BILLION worth of unclaimed tax withholdings and estimated taxes.
You can prepare the returns electronically using this service https://iTaxMama.com/FreeTaxUSA . But, filing these returns won’t be easy. You will have to file them on paper. And you know the IRS isn’t processing paper returns right now. So, you will have to PROVE that you filed before the deadline.
How? Send your tax return in, properly addressed, using CERTIFIED MAIL with proof of mailing. If possible, get proof of delivery. And guard that receipt carefully. Put it in a safe place. Because it’s going to take the IRS many months before they even get to open your envelope. To preserve your right to your refund, you will probably be called upon to prove that you mailed that tax return in by July 15th. So don’t slack off on this, please.
Reminder – Some Helpful IRS Links
Which IRS services are open and available – keep an eye on this link
IRS Electronic Options
IRS Online Assistance Available
Dealing with audit or collections issues – IRS is keeping this page up to date
Of course, all the filing and paying deadlines – including taxpayers overseas whose June 15th filing deadline has been pushed back to July 15th.
And a great chart: How to Use the Tools on IRS.gov to Get Your Economic Impact Payment https://www.irs.gov/newsroom/how-to-use-the-tools-on-irsgov-to-get-your-economic-impact-payment
And remember, you can find answers to all kinds of questions about taxes and business issues, and Enrolled Agent tax education, free. Where? Where else? At www.TaxMama.com .
Incidentally, I don’t know if you know – TaxMama.com® is a free resource for people to get answers to tax questions BEFORE they make major, costly moves.
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