After three months of freedom from thinking about taxes, the big day has finally arrived.
The financial fallout many experienced as a result of the coronavirus pandemic spurred the federal government to delay the traditional April 15 deadline for filing tax returns and payments until July 15. For many, the extra time to gather funds for payments they might owe served as a boon — not to mention stimulus payments the government doled out to Americans in April as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act, and is currently considering giving out again to workers and seniors in another round of stimulus payments.
On June 29 the Department of the Treasury and the IRS announced that the deadline to pay taxes would not be extended a second time beyond July 15. All taxpayers with an income tax filing or payment deadline that falls between April 1, 2020 and July 15, 2020 will need to file their taxes by midnight in their respective time zone.
How to get an extension
Individuals who still need more time to prepare and file their federal tax return can apply for an extension to file instead by October 15 by completing Form 4868. However, that application is due to the IRS by July 15 midnight in their local time zone. And, in order to get this tax extension, taxpayers will need to pay all or part of their tax due by July 15 — filing for an extension does not exempt taxpayers from making a payment on taxes due for the time being.
This will be especially applicable to real estate agents, who in most cases are self-employed, and need to make quarterly estimated tax payments. The same applies to businesses filing for an extension, which will need to submit Form 7004 to the IRS for an extension by July 15.
How to file
The IRS recommends taxpayers file their taxes electronically. Many services are available, including IRS Free File, free tax return prep sites and other commercial software and e-file providers, which the IRS outlines on its website. Using e-filing options helps reduce errors in filing since the software does the calculations for you and often flags common errors or missing fields.
Be sure to reference the IRS’s list of tax deadlines associated with July 15 since there are several other tax form deadlines that may be applicable to businesses and individuals.
Most agents are also able to claim business expenses, like auto and meal or entertainment expenses. For guidance, see IRS Publication 535, Business Expenses and IRS Publication 463, Travel, Gift and Car Expenses.
Another deduction that may be applicable (and certainly will be for many next year) is the use of your home as a business. Those individuals who utilized a home office as their principal place of business in 2019 should reference IRS Publication 587 for guidance. In general, real estate agents can reference the IRS’s page for real estate agent tax tips for more information.
See more tips from Jason Holliday, lawyer and tax expert, when he spoke with Inman back in March.