With just two weeks to go until this year’s tax filing deadline, now is the time to take advantage of the opportunity to make some key moves, which could translate into good tax savings. The Covid-19 crisis prompted the federal government to extend the due date to file its 2019 federal income tax return until July 15, which is also the last day to make contributions to certain tax-advantaged accounts.
Make IRA contributions
You can contribute up to $ 6,000 in an IRA (traditional or Roth) and add an additional $ 1,000 if you are 50 or older. Depending on your income, you may be able to get a tax deduction on the pre-tax money that goes into a traditional IRA. Roth IRA contributions are made with dollars after taxes.
Contribute to a health savings account
Set up a payment plan if you owe taxes
If you are not ready to file your taxes before July 15, you can request an extension that will give you until October 15 to file your return. However, the filing extension is not an extension to pay the taxes you owe. “The IRS understands that people affected by the coronavirus will not be able to pay their balances in full before July 15, but we have many payment options to help taxpayers,” IRS Commissioner Charles Rettig said in a statement. “These easy-to-use payment options are available on IRS.gov, and most can be done automatically without contacting an IRS representative.”
To avoid paying significant penalties and interest, “you can set up a payment plan: direct debit or write a check every month,” said Christina Taylor of Credit Karma Tax. “For many people, if they are struggling to make the day-to-day expenses, they went through their savings. There is a little-known program known as an ‘offer in compromise.’ You submit a form that offers a commitment on your tax debt.” Find out more at IRS.gov/payments.
Earn interest on your refund check
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