CPA and TurboTax expert Lisa Greene-Lewis offers some valuable advice for filing extensions, including for taxpayers who live in federally-declared disaster areas and those who claim the Child Tax Credit and the Child and Dependent Care Credit.
Getting ready to file your extended tax return? Here’s what you need to know
If you were one of those taxpayers who opted for an extension to file your tax return back in April, the clock is ticking! Come October, you need to be ready. TurboTax expert and CPA Lisa Greene-Lewis shared some valuable insights with TheStreet’s Tracy Byrnes on what filers should be aware of.
1. When is the deadline again? The extended tax return is due on Oct. 16. However, for those residing in areas affected by federal disasters, the deadline might differ, said Greene-Lewis. It’s essential to check the specific date if you were in one of those impacted zones.
2. Organizing is key. Just as you would for the April deadline, ensure all your documents – W-2s, 1099s, receipts, and other expense forms – are organized. Those receipts can lead to valuable deductions you might otherwise miss, said Geene-Lewis.
3. Changes to Covid relief benefits. Remember the considerable tax breaks in the year 2022 due to Covid relief? Some of them, especially those related to child benefits, have changed. For instance, the child tax credit that was up to $3,600 due to Covid relief has now reverted to $2,000. Similarly, the child and dependent care credit, which was $8,000 for two children, is now $2,100 for two children and $1,050 for one child. The recovery rebate credit, which was $1,400, “went away,” said Greene-Lewis.
4. Trading stocks or cryptocurrency? If you were active in stock or crypto trading, gathering accurate cost basis data is crucial for calculating capital gains or losses. TurboTax has a feature allowing you to automatically import up to $10,000 in stock transactions and $20,000 crypto transactions, eliminating the manual hassle, Greene-Lewis noted.
5. Declared disaster zones might have different deadlines. Those in federally-declared disaster zones received automatic extensions without the need for an application. Such areas have varying dates, with some as early as July, while others are in October. It’s crucial to check specific deadlines based on your location.
6. Unable to pay your tax bill? Consider an installment plan. The IRS is quite accommodating for those facing financial constraints. Taxpayers can request an installment agreement, which provides up to six years to settle what they owe. And remember, tools like TurboTax are there to assist, making sure you take advantage of every possible deduction and credit, said Greene-Lewis.
Read the full Q&A below or watch the video above.
Video transcript:
Tracy Byrnes: So it's maybe the middle of the summer. And you're probably sitting on the beach. You don't want to hear this. But if you extended your tax return back in April, it is due in October. You're going to have to go get your stuff together and figure this out. Lisa Greene-Lewis, TurboTax expert and CPA is with us right now. OK, Lisa. So first of all, when is your extended tax return due?
Lisa Greene-Lewis: Your extended tax return is due October 16. One thing to keep in mind, there were some states that were impacted or some areas impacted by federal disasters, and you may have a different date. So check out what yours is if you were impacted.
Tracy Byrnes: So what are some of the things that we should be thinking about now?
Lisa Greene-Lewis: Well, some of the things you should be thinking about, just like the normal time that you file in April, you want to gather all your documents in one place and start getting organized. You want to definitely gather your documents that include your income like W-2s, 1099s, but also don't forget your receipts and forms that show those expenses that you paid because those can be worth valuable deductions.
Tracy Byrnes: You'd also mentioned that there was some leftover Covid stuff that people need to be aware of. Is there anything still lingering?
Lisa Greene-Lewis: Some of the big things that people need to think about: a lot of people saw lower refunds in tax year 2022. And that was because of a lot of the Covid relief that went away, especially that relief related to kids. So, well, it didn't necessarily go away. But some of the relief for kids, it reverted to the old credits, so — the child tax credit.
With Covid relief, it was up to $3,600. Now it's reverted to $2,000. And then a big one, the Child and Dependent Care Credit, that was up to $8,000 for two kids. That's reverting to up to $2,100 for two kids and $1,050 for one child. And then the recovery rebate credit, that went away. So the last recovery rebate credit was $1,400. But that did go away.
Tracy Byrnes: Yeah. So people can see some big changes on their tax returns this year, which is going to be a little bit of a bummer, potentially owing more money. As a reminder, though, your tax bill was due in theory back in April when you filed your original extension. So people might be calculating interest and penalties at this point as well. One of the other things you noted too, though, was about stock transaction. A lot of stock trading happened last year. So whether it was stocks, cryptocurrencies, bonds, you can upload that stuff into TurboTax, right? And it could help you figure out your gain or loss.
Lisa Greene-Lewis: Right. Yeah, so you definitely-- when you're getting everything together, you want to have the accurate cost basis so that you can figure out your capital gains or losses. But one thing TurboTax allows you to do is you can automatically import up to $10,000 stock transactions and $20,000 crypto transactions at once. And you don't have to run around looking for your cost basis and manually inputting all those transactions. It does it all for you directly from your financial institution or crypto platform.
Tracy Byrnes: If you were in a declared disaster zone, where are you? Do you get more time, or are you still have to file by October?
Lisa Greene-Lewis: Yes. There were multiple dates and extensions for people that lived in those federally-declared disaster zones. So there were some coming up in July, some September, the majority in October. I know California, New York, some of those areas were in October, but you just do need to be aware of those dates. You weren't required to file an extension. It was automatic if you lived in those areas. But just be aware. Look up your state and your area to see what dates you have coming up.
Tracy Byrnes: And finally, as we mentioned the bill earlier, if you can't pay it, you can go on an installment payment plan with the IRS, can't you?
Lisa Greene-Lewis: Yes. The IRS, they do allow you to request an installment agreement. And that gives you up to six years to pay what you owe. So keep that in mind. Hopefully you don't owe and you're able to take advantage of all the deductions and credits, which TurboTax also helps you find, as well as you can have a TurboTax Live expert do your taxes for you. You can just hand over everything, and you don't have to worry about it.
Tracy Byrnes: It's great stuff. Lisa Greene-Lewis, TurboTax expert, thank you so much for being with us.
Lisa Greene-Lewis: Thank you for having me.
Editor's Note: The content was reviewed for tax accuracy by a TurboTax CPA expert for the 2022 tax year.
