As we're one month away from the April 15 deadline, tax filers now want to keep COVID-19 in mind, as well as other potential threats.
The Internal Revenue Service has its own special page dedicated to tax-related coronavirus updates that might involve any clarification of rules and potential tax relief.
For those with health savings accounts, the IRS said high-deductible plans can pay for 2019 novel coronavirus testing and treatment. And individuals with such plans would still be able to contribute to a health savings account, even if the plan picks up COVID-related costs.
The high deductible plans would not lose their status merely because they cover the cost of testing or treatment of COVID-19 before plan deductibles have been met.
The IRS also noted that any vaccination costs continue to count as preventive care and can be paid for by a high-deductible plan.
Will the April 15 deadline be delayed?
Last week, we heard more buzz that the April 15 deadline might be extended due to the coronavirus outbreak. As of early Friday, nothing had been announced, though, some expected more clarity soon.
Last week, President Donald Trump said he would instruct the Treasury Department to allow individuals and businesses negatively affected by the coronavirus to delay making payments past April 15. Trump declared a national emergency late Friday afternoon, which is necessary to move the deadline.
U.S. Treasury Secretary Steven Mnuchin raised the possibliity in testimony during a hearing before the House Appropriations Committee on Wednesday.
The American Institute of CPAs said Wednesday afternoon that it wants the Treasury Department and the IRS to provide relief to all taxpayers in light of the "uncertainty and challenges caused by the spread of the coronavirus pandemic."
The main idea is to help people avoid interest and penalties if they need to pay their taxes late. Some relief may be warranted in light of all the income that will be lost as a result of a long list of closures for the next month or so to combat COVID-19.
"We're monitoring the situation closely and are prepared to assist clients whether the deadline is April 15 or later," said Mark Steber, chief tax officer at Jackson Hewitt.
"While we encourage clients to file early to help reduce the threat of tax return fraud, if clients already know they need more time, for whatever reason, they can file an extension in-store or online and get an additional six months to file."
Typically, you'd file a Form 4868 to request a six month extension. And under the current rules, you'd have until Oct. 15 to file your return, not pay your taxes.
To avoid penalties and interest, taxpayers would need to file either a return or an extension and pay at least 90% of their tax liability by April 15.
Again some breaks could be ahead due to the severity of the health crisis.
How will you pay your taxes?
Many people pay their taxes by writing a check, pulling out a credit card or even applying online for some payment plans offered through the IRS.
The Michigan Department of Treasury, though, issued an alert to tax filers who owe money but want to pay their tax bills by tapping into some unique online third-party bill paying services.
The state has seen an increase of people trying to use these new services. But the state, like others, warned about concerns involving privacy, possible security issues and possible confusion relating to payments.
"There are an assortment of online bill-paying services,' said Ron Leix, a spokesman for Michigan's Department of Treasury.
"You basically pay your bills online using credit card through a provider's website. In turn, that provider cuts a check and sends it to where the bill is due. A fee is charged by the provider," he said.
Leix said there are two concerns here: You're giving away important information to a third party and your privacy isn't guaranteed.
Second, there may be processing delays because the check needs to be matched with the return.
"They're doing the right thing. They're paying their taxes. We get it and then we're like 'Who is this?' " Leix said.
The state goes through a process to confirm that the money is matched to the correct taxpayer.
"We don't want taxpayers to become a victim of identity theft or face penalties and interest due to an unauthorized service routing a payment incorrectly," said Deputy State Treasurer Glenn White, who oversees the Michigan Treasury's Tax Administration programs.
Credit card payments are hit with a convenience fee of 2.35% of the total payment amount. So if you owe $1,000 you'd be looking at a fee of $23.50. The fee will appear as a separate transaction on your bank or card statement and is paid directly to the payment processing company.
It's wise to do some research about any new kind of third party payment service.
The Better Business Bureau has received some complaints about Doxo, a what's known as a bill payment aggregation site. Users tap into a centralized platform to pay all of their bills owed to a variety of public utilities, such as water departments, as well as companies.
"Not good value for the cost," according to one complaint listed earlier this year on the BBB site."The fees are high and the website is cumbersome," said another consumer on the BBB site.
Other consumers said the payments were too slow and it took too many days to get bills paid.
The 2020 tax season had roughly a month to go before some massive shutdowns were announced to combat coronavirus. The IRS rolled out a new section online to address coronavirus issues.
The 2020 tax season had roughly a month to go before some massive shutdowns were announced to combat coronavirus. The IRS rolled out a new section online to address coronavirus issues.
The doxoPLUS program charges $4.99 a month to enable bill payments from your bank account with no delivery fees, up to a total of $3,000 of payments per month.
Roger Parks, a spokesman for the Seattle-based Doxo, said many consumers are happy with the service but in some cases people don't pay enough attention to making sure that a payment date will work in their situation. He noted that information is given online for the payment process for specific bills as they are being paid and customers need to check boxes to make sure those dates will work.
He said about 3.5 million people have paid at least one bill using Doxo. The service can be used when a biller cannot handle mobile payments or credit cards. Consumers can pay their bills with 60,000 entities through their bank accounts without paying any extra delivery fees.
Are you dealing with a 'ghost-tax preparer'?
Ever imagine you could get "ghosted" by a tax preparer, much like someone who never responds to texts, phone calls or emails after a bad date?
Consumer watchdogs, including the Better Business Bureau, are warning that unscrupulous characters can set up shop in a short-term rental location and may promise large refunds.
But it's possible the big refund depends on illegal short cuts when filling out that return.
"In 2006, the IRS made efforts to increase oversight of tax preparers to combat unscrupulous activity in the industry and began to require all tax preparers to have a PTIN, or a Preparer Tax Identification Number," according to a BBB warning.
"But this system only works if tax preparers sign the returns they file. Some tax preparers that don't want to follow the process, simply don't sign the returns!"
Instead, it's made to look like the taxpayer actually prepared his or her own return. And yes, if something goes wrong, the tax preparer is long gone.
One warning sign: The ghost preparer may want to print the paper return for the client and tell them to sign and mail it to the IRS. Or, for electronically filed returns, they will prepare it but won't digitally sign it as the paid preparer.
Sarah Kull, the special agent in charge for IRS Criminal Investigations Detroit Field Office, suggests you ask if the tax preparers office is open all year and how you'd get a hold of someone if there's a problem down the line.