5 Things to Know About Filing Your Family's Taxes in 2020
When? How? What? Here's what you need to know before tax day, which has been moved to July 15 due to the spread of the coronavirus (COVID-19).
The U.S. Treasury Secretary moved the IRS deadline to July 15—instead of the usual deadline of April 15—because of the spread of the coronavirus (COVID-19). Taxpayers can file their taxes before July 15 without any interest or penalties, according to The Washington Post.
But whether you're dreading the tax bill you know is coming or looking forward to a sizable refund, you might be confused about the process. If you're new to filing your taxes or just want to brush up on the basics, here are answers to some of the most common family tax season questions.
When Can We File Taxes?
Whether you like to get them taken care of early or wait until the last minute before filing, there's no escaping the taxman. Employers and other entities were required to provide W-2s and other tax forms, like 1099-MISC and W-3, by January 31. If you have all your documents and plan to e-file, the earliest date to file was January 27. If you don't think you can file by the cutoff day, which has been moved to July 15, you can file for an extension.
According to George Birrell, CPA, founder of virtual tax service Taxhub, anyone can file for an extension. Simply download the IRS form 4868 and mail it in before the deadline. "The IRS assesses two penalties for not filing: The failure-to-file and the failure-to-pay penalties. Filing for extension only gets you out of the failure-to-file penalty," explains Birrell. "It is important to remember that you can still get served the failure-to-pay penalty unless you have prepaid your taxes due equal to 90 percent of current years or 100 percent of prior year’s total tax liability."
The penalty for not filing your taxes on time is 5 percent of your tax bill per month until you send your return. The penalty for not paying your taxes on time is 0.5 percent of your unpaid tax per month until payment is made.
When Will Taxes Be Processed in 2020?
The IRS processes returns on a first come, first served basis, so early filers may have a shorter wait than those who wait until the last minute to check taxes off their to-do lists. Even if you filed your return in mid-January, it wouldn't have been processed until January 27, the day the IRS began processing. E-filing provides a quicker processing time than old-fashioned snail mail filing, so if you're anxious for your refund, go for the modern option.
To e-file, you can use the IRS free filing service or any number of online tax prep services (like those offered by H&R Block or TurboTax). The service provided by the IRS doesn't offer any tax guidance and you must know how to do your taxes yourself; the program only does the math.
When Do Tax Refunds Come in 2020?
The typical wait time between filing and receiving your refund is around 3 weeks if you e-file and at least 6 weeks if you mail a paper return. If you choose to have your refund direct-deposited into your bank account, you can shave a few days off of that time. The IRS recommends e-filing and opting for direct deposit for security reasons. There is minimal risk of identity theft or theft of your refund if everything is handled electronically.
When Are Taxes Due for 2020?
If you don't file for an extension, your taxes must be filed by July 15 (instead of the usual April 15). If you owe money, you pay your tax bill when you file or set up a payment plan with the IRS to pay in installments. Interest and late payment penalties accrue every month until your tax bill is paid in full.
When Can I Do My Taxes for 2020?
The IRS began processing returns on January 27, so you can do your taxes for the 2019 tax year anytime between then and July 15. You should have all the required documents by now, since employers and other entities are required to send tax documents on or before January 31.