Tax filings opened on January 27 for individual taxpayers. The filing deadline was Wednesday, April 15, 2020. However, due to the COVID-19 outbreak, the IRS has pushed back the filing and payment deadline until July 15, 2020. If you do not need additional time to file your taxes and are expecting a refund, you may still want to file sooner rather than later to get the refund check or deposit.
There have not been a lot of tax law changes over the prior year, when most of the Tax Cut and Jobs Act (TCJA) went into effect. However, one number that changes about every year is the cost of living adjustment based on inflation.
Tax Brackets for Tax Year 2019
The individual tax brackets for tax year 2019 remain the same as 2018, subject to cost of living changes. This means that if you made the exact same amount of income as the year before, you will pay slightly less in taxes.
For example, the 2019 federal income tax brackets increase over 2018 for single filers changed from:
| Tax Rate |
Single – 2019 |
Single – 2018 |
| 10% |
$0 – $9,700 |
$0 to $9,525 |
| 12% |
$9,701 – $39,475 |
$9,526 to $38,700 |
| 22% |
$39,476 – $84,200 |
$38,701 to $82,500 |
| 24% |
$84,201 to $160,725 |
$82,501 to $157,500 |
| 32% |
$160,726 to $204,100 |
$157,501 to $200,000 |
| 35% |
$204,101 to $510,300 |
$200,001 to $500,000 |
| 37% |
$510,301 or more |
$500,001 or more |
Calculating Tax Bracket Rates
As an example, not accounting for deductions, credits, losses, or other income, a taxpayer who made $40,000 in 2018 would end up owing:
10% on $9,525 (or $952.50); 12% on [$9,526 to $38,700 = $29,174] (or $3,500.88); and 22% on [$38,704 to $40,000 = $1,296] (or $285.12); for a total of: $4,738.50.
With the same $40,000 in 2019, the taxpayer would end up owing:
10% on $9,700 (or $970.00); 12% on [$9,701 to $39,475 = $29,774] (or $3,572.88); and 22% on [$39,476 to $40,000 = $524] (or $115.28); for a total of: $4,658.16.
Should I File an Extension to File the Return in October?
If tax day rolls around and you are not ready to file, you can file for an extension to delay filing your taxes for 6 months. The tax extension filing date this year will be Thursday, October 15, 2020. It is important to remember that an extension is not an extended period to pay your taxes, only an extension for filing your taxes. Your taxes will still be due July 15th, even if you file for an extension.
Failure to pay your July 15 tax payment in time may subject you to interest from the due date, underpayment penalties, or unfiled tax penalties.
Extensions for Military Members
Members of the military serving in combat zones or qualified hazardous duty areas or those living outside the U.S. may also have extended time to file their tax returns. Qualifying individuals living outside the U.S. are generally allowed an automatic 2-month extension to file their tax returns. However, like other tax extension filers, taxpayers may have to pay interest on any tax not paid by the regular tax return date.
Challenging IRS Tax Penalty Assessments for Maryland Taxpayers
Failure to pay taxes on time, filing late, or failure to file can result in interest and tax penalties. There may have been a legitimate reason for underpayment or if you need to make payment arrangements with the IRS, talk to an experienced Maryland tax attorney. Contact Gabaie & Associates, LLC for a free consultation on your state or federal tax issue at (410) 862-2198.
