Tax Filing Deadline Extended to Allow for Ease During Crisis
Posted: March 31, 2020
As we navigate through this historic event, the federal government is trying to act as quickly as possible to assist individuals and small business owners. One recent change made is an extension of the tax filing deadline for income tax returns.
Tax Filing Deadline
On Friday, March 20, Treasury Secretary Steven Mnuchin announced the filing deadline for income tax returns will now be July 15 rather than April 15, 2020. Those who are set to get a refund are encouraged to file their returns as soon as possible.
Earlier that week, the IRS deferred the payment deadline to July 15, but had kept the filing deadline of April 15 in place. The most recent change will now give taxpayers and businesses additional time to file and to make payments without interest or penalties.
It is expected many states will follow the lead of the federal government and delay their tax filing deadlines – but that will be a state-by-state decision.
IRA Contribution Deadline
An IRA contribution can be made up until a person’s tax filing deadline, not including extensions. Typically, that means a person can make a prior year contribution up until April 15.
With the extension of the filing deadline for income tax returns, the ability to make a 2019 IRA contribution has now been extended as well. Given the possible delays at this time for advisors and clients to meet, this is welcome news for members wanting to make a prior year contribution.
One of the advantages of a Roth IRA are the tax-free earnings that accumulate in the account. In order for the earnings to be tax-free, a Roth IRA must be opened for at least 5 years and the owner must be at least 59 ½, a first-time homebuyer, disabled, or deceased. When making a prior year contribution for a Roth IRA, the contribution will count for the whole preceding year towards the 5-year earnings clock. If an individual makes a 2019 Roth IRA contribution on July 15, 2020, they will be considered 1.5 years into their 5-year clock.
Reminder: When making a prior year contribution (especially after April 15), make certain you indicate the contribution is for 2019! Without clear direction, the contribution will likely be coded as a 2020 contribution.
Here to Help.
These are obviously challenging times in many ways. While we’re not able to alleviate all the concerns and anxiety you may be feeling, changes like this tax extension remind us that normal days will return and the value of financial and retirement planning is still constant.
While our offices located in your local WESTconsin Credit Union location are currently closed, our virtual services are available at no additional cost to you. As your time allows, we encourage you to schedule a 20-minute phone call for us to connect. You can also email us at [email protected]. During this time, we can review your short-term and long-term goals while also discussing any urgent financial needs. We are currently working from home and have availability, so please call or email us to set up an appointment.
Representative is not a tax advisor. For information regarding your specific tax situation, please consult a tax professional.
The federal government crisis response is changing daily, this information is as of March 23, 2020.
IRA and Roth IRA may not be appropriate for all investors, consult with your representative for specific product details. Representatives are registered, securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, which is not an affiliate of the credit union. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America.