Tax is something that the government levies on various sources of income of any individual, company, entity, or any functional body. Tax has its pros & cons, from business to business, and person to person. Every year, all of us have to file the taxes on April 15th. As the pandemic is affecting a lot this year, the government has planned and extended tax filing deadlines to July 15th for individuals, due to Covid-19. Maybe cash flow will get back on track by then.
The deadline extension also applies to other types of returns for 2019 contributions to IRAs and HSAs. Thus, the government has thought from all the angles and to extended tax filing deadlines dates this year.
CARES Act
The Coronavirus Aid Relief and Economic Security Act is meant to address the economic fallout. To provide emergency assistance, health care responsibility, etc. of the Corona pandemic in the United States.
The Following are the Major Benefits with Extended Tax Filing Deadlines
- The extension of the due date for filing income tax also leads to the extended tax filing deadlines for contributing to the IRA for 2019. Both dates have now extended to July 15th from April 15th.
- Another opportunity for those clients who may fall short with cash to contribute in IRA 2019, received an extension for 3 months. The tax liability for 2019 will be reduced for those who contributed to the traditional IRA on a pre-tax basis.
- As many investments are on their low, doing a backdoor Roth conversion during this time can allow people to invest money and earn from it more, than in recent years. The extension of three months can be beneficial.
- The clients who are with high-deductible health insurance plans (HRAs) covered but were not able to maximize their contribution, can do it in the next three months. It can be done by providing a way to these clients to increase their 2019 contribution and gain the tax benefits.
- Even the small business owners can get benefits from the various provisions of the CARES Act. (Apart from the benefits which are driven by the extended tax filing deadlines and related payments)
- CARES Act also provides provision for relief for retirement plans, thus benefiting many.
The Bottom Line
The government works around us, and we are taxed for services, which they provide to us. Therefore, it is good when you pay your taxes without evasion. The world is fighting to survive with this pandemic. We hope that things will be back on track soon and only time will tell. Try to maximize the potential in every way. Make use of technology to make our lives being less affected by this pandemic. Therefore, look for the tax benefits that can fit your income and make the best use of this extension.
