As the global coronavirus pandemic continues, many small businesses and individuals are wondering how to stay afloat and navigate the now-murky waters of the new tax landscape.
There are many ways that a CPA can help you and/or your business during this critical time. CPAs are a beacon for those who are struggling to manage financial setbacks and juggle the new tax updates and guidelines from the IRS that continue to crop up. CPAs will provide you with reliable information, direct from the sources - it is their job to decode the information that the IRS and the government disseminates in their attempt to provide assistance and relief during COVID-19. Also, with their expertise and tools, a CPA will help you develop a solid tax strategy, both for these current times and going forward. In other words, CPAs will help you keep your head above water when the ship feels like it’s sinking.
IMPORTANT TAX UPDATES A CPA WILL BREAK DOWN
You might have heard about the 90-day tax payment extension due to the coronavirus pandemic but aren’t certain about what it covers. Tax Day is now July 15, 2020 due to the coronavirus pandemic, and this change includes both the filing and payment deadline. The IRS is still accepting returns and processing refunds, and a CPA is ready to help you get your refunds when you need them most.
As of March 20, 2020, the Treasury Department announced the following COVID-19 tax deadline guidelines, granting certain taxpayers and businesses an additional 90 days to file and pay their 2019 tax liability.
Here are a few of the items that your CPA can walk you through:
Tax return deadline – July 15, 2020. Your tax filing is now due on this date. If you need more time, you can request an extension to October 15, 2020.
Tax payment deadline – July 15, 2020. If you owe income taxes for 2019, you can delay your IRS payment until this time. You will not owe interest or penalties if you pay before this deadline.
You may be wondering if you are a filer that is eligible for the tax filing and payment deferral. Here are the groups that are able to take advantage of these deadline extensions:
-Individual Form 1040 filers
-Corporations filing Form 1120
-Trusts and States filing Form 1041
-Fiscal year partnerships, associations and companies with due dates on April 15, 2020 (uncommon)
If you are a qualifying filer and need more time to file your taxes past the July 15th extension, you must file Form 4868 to request an extension by July 15, 2020. This extension would give you until October 15 to file your return, but your payment would still be due by the extended payment deadline, July 15, 2020.
If you are already expecting a refund, these tax updates will not affect you. The Treasury Department says you should still expect to receive your refund within the normal time period (9 out of 10 are received within 21 days of electronic filing).
A DEEPER DIVE INTO TAX DEFERRAL
As to the payments the deferral covers, this includes tax payments, as well as any normally associated interest and penalties, such as the failure-to-pay penalty. It also covers estimated tax payments (included payments of tax on self-employment income) due on April 15, 2020, for the 2020 tax year and there is no limit on the amount of tax payment you can defer.
This deferral applies to both the first quarter 2020 estimated tax payment (including estimated self-employment taxes) otherwise due on April 15, 2020, and the second quarter 2020 estimated tax payment otherwise due on June 15, 2020 are deferred until July 15, 2020.
States are issuing their own guidance about deferrals and deadlines. Your CPA can provide exact deadlines for the state in which you reside or operate your business from.
*Keep in mind that this deferral does NOT mean that you don’t have to pay your 2019 taxes, the deferral only extends the due date of when your tax liability is due. Interest and penalties will again accrue on outstanding tax liabilities starting July 16, 2020. The deferral does not exclude or exempt taxpayers from filing if they are already required to file.
OTHER WAYS YOUR CPA CAN HELP
In hard times, paying for an accountant might be the last thing on your mind. However, a CPA can help you unlock many sources of government and private financial relief and suggest ways to save money by adeptly navigating your tax filing process, returns, and record keeping. The services they provide will keep you from losing money, allowing you to save in the long run.
-Provide a smart approach to financial relief and tax incentives that are often subject to many caveats and unique conditions, unknown to even the most well-informed tax payer.
-Ensure that you don’t miss important deadlines or let important tax documents fall through the cracks.
-Inform you on what relief programs you’re eligible for and recommend which ones to prioritize. When it comes to relief, there’s a lot to wrap your head around.
-Allow you to cut through the noise, specifically with tax changes that are pertinent to you or your business personally.
-Help to keep your books up to date and take care of the paperwork, so you can focus on other major life and business changes due to the pandemic.
Everyone needs help in a crisis. An experienced Certified Tax Professional can help you navigate the quickly changing landscape of the IRS updates, government aid, and help you get the resources you need so that you can still save the most money while staying within IRS tax guidelines.
Scott Boyar is a certified tax accountant with years of experience and expertise to help you with all of your tax preparation, filing, and bookkeeping needs. Schedule an appointment to learn how he can help you or your business before, during, and after crisis hits.