With much of the country focused on the COVID-19 crisis, it's easy to understand why many people may have delayed filing their taxes, but the deadline is here. If you still haven't filed yet, here are five things to know.
- GET ORGANIZED
“Collect the documents you're going need, things like W2s 1099, mortgage interest statements, records of charitable donations. You'll need all of that. There are really some good, free tax organizers that you can find online if you are going to do it yourself, but if you're going to work with a tax professional, they'll have an organizer that they'll send to you that you can use," Brent Everett, Chief Investment Officer with Generational Wealth Advisors.
2. STIMULUS CHECK
If you haven’t received your stimulus check, you might need to file your 2019 taxes in order to get it.
“The 2019 return can qualify you even if you didn't qualify in 2018, but you've got to file it. The process for distributing the checks was intentionally very rushed. They wanted to get that money out there. But there are a lot of things that could and did go wrong in a situation like that. Things went to old accounts that people weren’t using anymore. And stimulus checks got paid to dead people and all the typical crazy stories that you hear about," said Everett.
3. NEED EXTRA TIME?
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Filing taxes is stressful, even in the best of times and this year it may be too overwhelming for some. If you do need extra time, file a form 4868 extension before the deadline. You won't have to file till October, but you will still need to pay your taxes by Wednesday.
4. IRA AND HEALTH SAVINGS ACCOUNTS
You still have time to make contributions to your IRA and health savings accounts. For the 2019 tax year, you can save up to $6,000 in your IRA. If you’re over 50, you can add in another $1,000.
Further, if you have a high-deductible health plan with a health savings account, you can stash up to $3,500 if you have self-only coverage. That number goes up to $7,000 for family plans.
Throw in an additional $1,000 toward your HSA if you’re 55 and over.
Saving in both HSAs and IRAs brings a bevy of tax benefits. HSA contributions are tax-deductible or pretax, while IRA contributions can be tax-deductible depending on your income.
5. PEOPLE 70 AND OLDER
If you are over 70 -- consider doing a Roth IRA conversion.
"By moving some funds from your traditional IRA to a Roth IRA, you can do what we like to refer to as tax diversification. Creating different buckets that you can pull from in retirement," said Everett.
Everett suggests you work with a financial planner or tax professional to get help with that.
Two extra points to keep in mind: filing an extension usually buys you an extra six months, but this year, it's still just six months from the original April 15 deadline. Also, if you still can't get your stimulus payment sorted, Everett says you can always claim it as a tax credit on your 2020 tax return that you file next year.
