The IRS rolled out deadline extensions and new programs to help individuals and businesses navigate the COVID-19 pandemic. A recap of these announcements is included here for your review. Also in this month’s edition is an interesting tax quiz to see if you can guess which states have the highest taxes! These are challenging times. Rest assured as things change on the tax landscape, you will be among the first to know. Please stay safe.This month
- April 15 (Extended to July 15)
- Individual tax returns due
- C corporation tax returns due
- First-quarter 2020 estimated tax due
- April 12
- Easter Sunday
In this issue:
- Tax Deadlines Move to July 15
- Tax Quiz: Who’s the Highest?Take this trivia quiz and test your state tax knowledge!
- Keep Your Social Security Number SafeIdentity thieves are very active right now
Tax Deadlines Move to July 15
The April 15 federal income tax filing due date has been moved to July 15, the U.S. Treasury Department and IRS recently announced. Here is what you need to know:
- The due dates for all tax payments normally due April 15 have been pushed back 90 days to July 15, regardless of the amount owed. This applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax.
- Payments that can be extended to July 15 include income tax payments and self-employment tax payments that are associated with the 2019 taxable year. Also extended are estimated income tax payments for the 2020 taxable year.
- The 90-day extension from April 15 to July 15 is automatic. No additional forms must be filed to receive the 90 day extension.
Some thoughts
While the federal government grants you an additional 3 months to file and pay your 2019 taxes, you may wish to still file your tax return by April 15. Here are some thoughts on different situations.
You anticipate a refund. If you are expecting a refund, file your tax return immediately. A refund right now can come in handy.
An extension might still make sense. This change automatically extends everyone’s due date to July 15. But you may still wish to file a tax extension to move your tax return date to October 15, 2020. While payments are now due on or before July 15, a traditional extension still buys you more time to file your tax return.
Watch for state announcements. States are rolling out their own guidelines for extensions. Since most states require copies of federal tax return information, be prepared to still file by April 15. Remember, even if you wait until later to file your federal return and pay your tax, you may have to file your state and/or local return sooner.
What if I get a penalty anyway? Affected taxpayers subject to penalties and additional tax despite this relief provision may seek a waiver.
Rest assured, as the rules and deadlines change, updates will be provided. In the meantime, please stay safe during this challenging time.
Note: This is a fast changing topic. These rules are as of March 24, 2020.
Tax Quiz: Who’s the Highest?
Take this trivia quiz and test your state tax knowledge!
Here’s a quiz to test your state tax IQ and give you some fun facts about the taxes paid by friends in other states.
- Thinking about buying a new house? Which state has the highest property taxes?
- Texas
- New Jersey
- Illinois
- New Hampshire
- b. New Jersey. Unlike most states, New Jersey does not allow counties and cities to impose their own sales tax, so these localities get all their tax revenue from property taxes. In 2018, the property taxes in the 8 most expensive New Jersey towns averaged more than $20,000 while another 47 towns exceeded $15,000!
- Which state will drive up the cost of your shopping spree with the highest sales tax?
- Tennessee
- Washington
- New York
- Arizona
- a. Tennessee. At 9.53%, Tennessee has the highest combined sales tax rate in the nation. It’s a tough pill to swallow when you consider that the same purchase made in Kentucky may cost only 6% in sales tax!
- Relocating for a new position? Which state will take the most taxes out of your new salary?
- Hawaii
- California
- Minnesota
- Oregon
- b. California. Before accepting your new job, run the numbers to see how your take-home pay compares. California’s top income tax bracket rate is 13.3%.
- If you are headed on a brewery tour, in which state will you pay more for a pint of your favorite adult beverage?
- Alaska
- South Carolina
- Maryland
- Tennessee
- d. Tennessee. The Volunteer State charges a beer tax of $1.29 per gallon. Fun fact: Tennessee is technically a dry state. The state leaves it up to individual counties and cities to determine whether alcohol can be purchased.
- When planning a vacation, which state charges you the most for staying in a hotel?
- Massachusetts
- Connecticut
- Colorado
- Florida
- b. Connecticut. Book a room in Connecticut and you’ll pay a whopping 15% in lodging taxes. To fix a temporary issue with the state budget in 2011, the state bumped it up from 12%. The Nutmeg State must have gotten used to the extra revenue.
Keep Your Social Security Number Safe
Identity thieves are very active right now
Countries and citizens around the world are banding together to defeat the coronavirus. While your attention is concentrated on protecting your family, friends and community, identity thieves are seeing an opportunity to swipe your confidential information.
Very few things in life create a higher degree of stress and hassle than having your Social Security Number (SSN) stolen, especially during a pandemic like we are now experiencing. This is because, unlike other forms of ID, the SSN is virtually permanent. While most instances of SSN theft are outside your control, there are some things that you can do to minimize the risk of this ever happening to you.
- Never carry your card. Place your SSN card in a safe place. This place is NEVER your wallet or purse. Only take the card with you when you need it, then return it immediately to your designated safe place.
- Know who needs it. As identity theft becomes more common, there are fewer people or organizations who really need to know your Social Security number. Here is a list of entities who still need your SSN:
- The government. Federal and state governments use this number to track your earnings for retirement benefits and to ensure you pay proper taxes.
- Your employer. The SSN is used to track your wages and withholdings. It is also used as proof of citizenship and to contribute to your Social Security and Medicare accounts.
- Certain financial institutions. Your SSN is used by various financial institutions to prove citizenship, open bank accounts, provide loans and establish other forms of credit.
- Know who really does not need it. Many other vendors may ask for your Social Security number, but having it is not an essential requirement. The most common requests come from health care providers and insurance companies. But the request for your number may come from anyone who wishes to collect an unpaid bill. When asked on a form for your number, leave it blank. Challenge the provider if it is requested.
- Destroy and distort. Shred any documents that have your SSN listed. When providing copies of your tax return to anyone, distort or cover your SSN. Remember your entire SSN could appear on the top of each page of Form 1040, although that is becoming less common. If the government requests your SSN on a check payment, only place the last four digits on the check, while pre-filling the first five digits with x’s.
- Keep your scammer alert on high. Never give out your SSN over the phone or via e-mail. Do not even confirm your SSN to someone who happens to read it back to you on the phone. If this happens to you, file a police report and report the theft to the IRS and Federal Trade Commission.
- Proactively check for use. Periodically check your credit reports for potential use of your SSN. If suspicious activity is found, have the credit agencies place a fraud alert on your account. Remember, everyone is entitled to a free credit report once a year. Multiple businesses can provide you with your free credit report.
Replacing a stolen SSN is not only hard to do, it can create hardships. You will need to re-establish your credit history, re-assign your SSN benefits history, and realign your tax records. Your best defense is to stop the theft before it happens.
As always, should you have any questions or concerns regarding your tax situation please feel free to call.
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