Your Money Matters: Taxes are due, are you ready?

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Felicia Stevenson – Jackson Hewitt

https://jacksonhewitt.com/

  • The federal and state income taxes for 2019 are due on July 15, 2020
  • Top tips: 
    • Get organized and gather all materials 
    • Work with a trusted tax professional in order to find every credit and deduction available and to ensure taxes are done properly 
    • Have until July 15 to make contributions for 2019 for IRA and HSA accounts
    • First year under tax reform where there is not a penalty for not having health insurance 
    • New form 1040 and 1040-SR for senior taxpayers
    • If you went through any life changes (change of address, marriage/divorce), make sure any special forms are filled out sooner rather than later
  • Filing an extension
    • Taxpayers can file for an automatic extension, Form 4868, by July 15, 2020, in order to have your deadline pushed back to October 15, 2020. But this doesn’t give taxpayers an extension if they owe the IRS. If taxpayers don’t pay their taxes by the tax deadline on July 15, 2020, they can get hit with penalties and interest. Delays get expensive — interest is compounded daily and penalties are calculated monthly on any remaining balance until taxes are paid in full or reach the maximum penalty.
      • The penalty for filing late is:
        • Five percent for every month that the outstanding tax is not paid.
        • The maximum penalty for paying late is 25 percent of the total.
        • After 60 days, the minimum penalty is $205 or 100 percent of the balance due, whichever is smaller.
  • 2020 + tax complications due to unemployment 
    • 45 million Americans were out of work in April 2020
    • Taxpayers need to know that unemployment compensation IS taxable income and MUST be included on their 2020 tax return
    • It’s incredibly important for everyone who has collected unemployment this year to do a withholdings check-up so you can see where you stand with your 2020 taxes in order to make any adjustments necessary to keep from owning more than expected next year

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