"When the government extended to July 15, most taxpayers took a breath and were more concerned about obtaining government funding," Paul Miller, CPA and founder ofThe tax season as a whole has been "unusual and never-ending," Miller said, and now it's becoming apparent that the deadline extensions have created a bottleneck of tax bills for independent workers.The US tax system is pay-as-you-go.
Since the first two estimated tax payment deadlines of 2020 were pushed back, Miller notes that many of these workers may now owe up to six separate payments on July 15 — their federal and/or state balances for 2019, plus their federal and/or state estimated payments for 2020., or AICPA, told Business Insider that this filing season is challenging for both taxpayers and tax professionals helping to prepare returns. Many are concerned about their clients' ability to pay, he said.
During the 90-day postponement, interest and penalties on tax payments were waived. They're expected to begin accruing as usual on July 16 barring further government relief.The IRS says that if you plan to owe more than $1,000 in income taxes for the year, you typically need to pay at least 90% of your current federal tax liability — or 100% or your federal tax liability on the previous year's return, whichever is smaller — to avoid an underpayment penalty.
Miller urges taxpayers to pay as much of their outstanding balance as they can by July 15. If you don't have enough cash to make every payment, prioritize your 2019 balance ahead of your estimated payments, he said.to comply with the federal extension. If you owe both federal and state taxes, Miller recommends "paying the state in full and just dealing with the federal government.
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