Record $2 trillion COVID-19 stimulus bill reached early this morning
“Hindsight is always 20/20”, the proverbial expression that may never be more used than when we assess and scrutinize the decision-making of our leaders 20 years from now. Well, we at TaxPM™ are optimists, and so being we would like to inject our proverbial phrase amid the crisis that is COVID-19, “When the going gets tough, the tough get going!”
Gov. Cuomo of New York said yesterday, “There’s a smarter approach to this…We can develop a more defined public health strategy that is also an economic strategy.” Unfortunately, we currently live in such a politically divided country, evidenced by the bickering and high-tension on Capitol Hill over the past few days, that many are making this an “either-or scenario.” Notwithstanding, we agree with the Governor that there needs to be a way to save the economy without putting the public at undue risk.
Enter the two most important federal agencies to rescue humanity and our privileged way of life, the U.S. Department of Health and Human Services (HHS) and the U.S. Small Business Administration (SBA). It would be epically irresponsible of us to put one in front of the other. As one of America’s most valuable human assets and heroes, Bill Gates (he and wife Melinda get my vote for “Couple of The Century”), put it in an interview with TED yesterday, “The economic effect of this is really dramatic…But bringing the economy back…that’s more of a reversible thing than bringing people back to life.” Unsurprisingly, the world’s most philanthropic couple through their foundation, have thus far donated $100 million to fund testing and science in response to the pandemic.
Mainstreet is suffering, both physically and financially. While Americans and all the people of the world are facing potentially the greatest threat to our existence, citizens and small businesses are fighting to stave off insolvency in what could be the greatest financial crisis in our nation’s history. There is no doubt that COVID-19 will forever imprint itself on humanity and affect how we live and do business from here forward. If your business has been impacted by the disastrous effects of COVID-19, your company may qualify for assistance via a low-interest federal disaster loan funded by the U.S. Small Business Administration (SBA). The loans can be used to meet payroll, pay fixed debts, accounts payable and other bills that can’t be paid because of the disaster’s impact. We are here to help, contact the professionals at TaxPM™ today!
The Federal Tax Filing deadline has been extended to July 15, 2020. Taxpayers expecting a refund are encouraged to file their taxes now to get their money.
Learn more by visiting the official IRS website.
If You Owe Taxes
If you owe taxes for 2020 or multiple previous tax years and you have not filed nor paid the taxes due, you will most likely be subject to late filing and late payment penalties. Here are some recommended actions to take:
- Download the respective Tax Forms for the Tax Year in Question.
- Use the IRS Tax Withholding Estimator.
- Complete the required Income Tax Forms and Mail Them to the IRS.
- Even if you can’t pay your taxes, follow the steps above and pay as much as you can afford. This will at least stop the late filing penalties, which in many times are higher than the late payment penalties.
Never too early to organize your tax documents for 2019
Although the tax deadline for filing and paying 2019 federal income taxes is still months away, it’s never too early to get organized.
On a yearly basis (usually in November) the IRS adjusts as many as 40 tax provisions for inflation. This is done to prevent what is called “bracket creep,” when people are pushed into higher income tax brackets or have reduced value from credits and deductions due to inflation, instead of any increase in real income. In some cases the changes may seem minimal, but hey – a penny saved is a penny earned!
The IRS used to use the Consumer Price Index (CPI) to calculate the past year’s inflation. However, with the Tax Cuts and Jobs Act of 2017, the IRS will now use the Chained Consumer Price Index (C-CPI) to adjust income thresholds, deduction amounts, and credit values accordingly. Below see the updated tax brackets for 2019.
Income Tax Brackets and Rates
In 2019, the income limits for all tax brackets and all filers will be adjusted for inflation and will be as follows (Tables 1). The top marginal income tax rate of 37 percent will hit taxpayers with taxable income of $510,300 and higher for single filers and $612,350 and higher for married couples filing jointly.
Table 1. Tax Brackets and Rates, 2019
||For Unmarried Individuals, Taxable Income Over
||For Married Individuals Filing Joint Returns, Taxable Income Over
||For Heads of Households, Taxable Income Over
Standard Deduction and Personal Exemption
The standard deduction for single filers will increase by $200 and by $400 for married couples filing jointly (Table 2).
The personal exemption for 2019 remains eliminated.
Table 2. 2019 Standard Deduction and Personal Exemption
|Married Filing Jointly
|Head of Household
How do I file a tax extension for 2019?
Today is the deadline for filing and paying 2018 federal income taxes. Any filings after today that are not on extension will be considered late and subject to penalties and interest assessments. Remember if you mail in your return, it must be postmarked today, so make sure that the mailing service you are using whether it be the US Postal service drop-off or other have a collection time that will meet the April 15th postmark deadline.
In the event that you cannot file your tax return by the deadline, you need to file for a tax extension, which is also subject to the above April 15th postmark deadline. To get a filling a tax extension, you will need to submit Form 4868(Application for Automatic Extension of Time To File U.S. Individual Income Tax Return).
The IRS also allows you to get an extension by paying all or part of your estimated income tax due and indicate that the payment is for an extension using Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or a credit or debit card. This way you won’t have to file a separate extension form and you will receive a confirmation number for your records.
It is important to note that, an extension to file will give you six more months to file your taxes, until Oct. 15. It does not however, give you extra time to pay your taxes. You still must estimate and pay what you owe by April 15. You will be charged interest on any amount not paid by the deadline. Below are the 2018 Income Tax Brackets to assist you estimate how much money you will need to send (if any) along with your Form 4868.
2018 Income Tax Brackets and Standard Deduction Rates
Table 1. 2018 Income Tax Brackets and Rates
Table 2. 2018 Personal Exemption and Standard Deduction
The personal exemption for 2018 is eliminated