MAXIMIZING THE TAX FILING DEADLINE
July 14, 2020 - Douglas Myser
Maximizing the tax filing deadline. 2020 has been an odd year, to say the least. It seems that everything has been delayed or postponed to another time due to the COVID-19 crisis. This delay applies to tax season as well as the treasury Department and the IRS announced in March that the federal income tax filing deadline is automatically extended from April 15th, 2020 to July 15th, 2020. While this change will benefit Americans in giving them more time to file during the pandemic, it also gives an additional opportunity that taxpayers should take advantage. By extending tax season, this also meant that taxpayers can fund their IRAs, ROTH IRAs and Health Savings Accounts for 2019 until July 15, 2020. Using this time to help with your retirement planning is also a way to feel better about the overall state of your finances. The recent AICPA Personal Financial Planning Trends survey of 870 CPA financial planners found that 80 percent of respondents felt their clients had a higher level of stress about their financial plan than normal. Maximizing the tax filing deadline.
As a result, the ability to fund retirement plans for 2019 until July 15th is a big opportunity for taxpayers who are trying to catch up on their retirement savings. However, it is key to understand the rules to maximize this funding extension, so it benefits you. For 2019, taxpayers are eligible to fund their IRS or ROTH IRA with a contribution of $6,000 for the year. For taxpayers who are age 50 and older, they can fund an additional $1,000 catch up contribution.
Yet the rules around this funding can seem complicated at times. First, you need to consider your adjusted gross income in determining whether you should be funding an IRA or ROTH IRA. You can fund a ROTH IRA if your AGI is $122,000 or less as a single filer and $193,000 or less filing married joint. If your income exceeds these limits, you should fund a traditional IRA.