Updated: Mar 20, 2020
Treasury Secretary Steven Mnuchin announced that the U.S. Department of the Treasury is delaying the April 15th deadline to pay taxes by 90 days, giving individuals and businesses another 3 months to pay the government what they owe.
At a news conference, Secretary Mnuchin said that individuals can defer up to $1 million of tax liability and corporations get an extension on up to $10 million.
“All you have to do is file your taxes,” Mnuchin said. “You’ll automatically not get charged interest and penalties.”
Putting off paying taxes until right before the deadline is human nature. In fact, according to recent statistics from the IRS, almost 70 million individuals had already filed their tax returns as of early March. And that’s only 45% of the returns the IRS expects to receive this year.
What Should You Do?
For those who haven’t filed yet, here are some tips from a financial advisor. The first is to have a professional, fill out your returns to the Internal Revenue Service. Two reasons to convince you to have your taxes done professionally:
· The IRS estimates that the average person will require about 11 hours to prepare a 2020 tax return
· According to a survey by the National Society of Accountants, the average charged for filling out your basic federal and state returns is $261
So it is most likely worth your time and money to have an expert prepare your tax return or at least look it over for you.
Taxes are Complex
Preparing your own returns can take a lot of time, but the exact amount of time depends on the complexity of your finances.
You already know that the federal, state and local tax laws are complex, and constantly changing. But remember, the Tax Cuts and Jobs Act made some significant changes to the tax code when it went into effect. In fact, most consider the Tax Cuts and Jobs Act to be the biggest tax reform legislation in more than 30 years.
For example, standard deductions came close to doubling and this might make itemizing less attractive to some taxpayers.
· Single taxpayers will see their standard deductions jump from $6,350 for 2017 taxes to $12,200 for 2019 taxes
· Married couples filing jointly see an increase from $12,700 to $24,400 for 2019
Further, did you know that:
· For families with children the Child Tax Credit doubled from $1,000 per child to $2,000?
· The amount that is refundable grows from $1,100 to $1,400?
· There is a new non-refundable credit of $500 for dependents other than children?
Should You Delay or Not?
The answer to that question, of course, depends on your situation. But it’s likely that for a lot of people, it makes sense to just stick to the original schedule and file and pay taxes by April 15th. Ask yourself this question:
“Is there any real benefit to waiting until July 15th?”
When you’ve answered that question, make sure you talk to your financial advisor.