Here are some things to keep in mind to make sure you can make the most out of the filing extension.
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How to Take Advantage of the Tax Filing Extension

Filing taxes doesn’t have to be a daunting or anxiety-inducing task. For starters, to give Americans some breathing room in the current global climate, the national filing deadline has been extended to July 15, which gives you an opportunity to focus on staying safe, and plenty of time to make sure that you have all of your paperwork and information in order. Even if you don’t take an “early bird” approach to tax season, there is no reason to stress if you’re still waiting to get your taxes in order. Staying calm and informed, seeking help from a professional, and understanding any changes from previous years are some of the best ways to make sure you can get through tax season in one piece.

Here are some things to keep in mind to make sure you can maximize every deduction, get your paperwork sorted without missing anything important, and make the most out of the filing extension:

Use your time wisely

Keeping yourself and loved ones safe and healthy is understandably your topmost priority right now. However, using the extra time that you have this year wisely can also work in your favor when it comes to taxes. If you have a relatively straightforward tax process and are expecting a refund, you might want to file sooner than later — the extra cash could also come handy in uncertain times. If your financial situation is less straightforward, you might want to use the next few months to get all your documents in order. Dig out and organize any receipts, make a checklist, itemize deductions, rescue missing W-2s, and get ahead of the game as much as you’re able to.

Hire a tax preparer

If you’ve had major recent life changes, are a freelancer, have multiple jobs, or just have a more complex financial circumstance than most, it might be worth turning to a professional for help. CPAs and tax preparers can help you navigate tricky tax landscapes, and work with you to get every possible deduction. While it’s often tempting to take a DIY approach to doing your taxes, contacting a tax preparer ahead of time might save you money and stress in the long run. On average, Americans paid $481 in 2018-2019 for professional help to prepare and file their taxes, according to the National Society of Accountants, so if you’re considering this route, you might want to contact someone sooner than later, as filing services tend to get more expensive the closer to the filing deadline it gets. Keep in mind that availability and resources might be affected given uncertainty surrounding COVID-19.

Be informed of changes from last year

Even if your situation remains mostly unchanged, keep in mind that every year, tax guidelines and brackets change to keep up with inflation and to reflect the policies of a particular administration. Read up on any shifts that might affect your particular tax status, and see how these impact this year’s filing. Certain deductions or credits might now apply to you, and you’ll be able to make informed decisions about opting for a standard deduction versus an itemized one.

Mind your deductions

Speaking of deductions, recent tax changes nearly doubled the standard deduction, making it a lot less pressing for most to itemize deductions to maximize their return. But keep in mind that you may still need to plug in deductible expenses — including state and local taxes, charitable donations, and mortgage interest — to figure out if you’re better off itemizing. For 2020 the standard deduction for individuals has increased to $12,400 and for those married filing jointly it increased to $24,800.

If you need more time, ask for an extension

Making sure you file your taxes properly should still be your top priority to avoid being audited or having to pay more than you actually owe. If the deadline extension doesn’t give you enough time, or you need to use the next few months to focus on yourself and your family, you can always opt for a tax extension. The IRS grants automatic six-month extensions to file your taxes every year should you need the extra time – all you have to do is submit form 4868 by the July deadline. Keep in mind that even if you ask for an extension to file, you must still pay your income tax in full by the July deadline to avoid late payment penalties.

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