The world is always changing. However, the recent crisis has turned the world upside down and asks everyone to think on their toes. Unfortunately, one detail that gets lost amid immense change is tax planning.
Despite the current crisis, taxes aren’t going away. It’s critical that everyone takes a moment to step back and reevaluate their taxes and strategy before it is too late to adjust to the new reality.
File if you haven’t already
Due to the new circumstances, the IRS announced an extension of the deadline for 2019 returns. The new deadline is July 15, 2020. While the extension is helpful, it’s still important to file as soon as possible. Talk to your tax planning professional to get a full understanding your particular situation.
Consider boosting your retirement
While the economy is taking a dramatic downward turn, it may be the perfect time to boost contributions to your retirement plans, like your traditional IRA or 401(k). If you have a steady paycheck and consistent work, consider upping your contributions to your retirement while you are spending less and still receiving an income. Also, if you contribute more to your retirement now, it could pay off in a lower tax bill for 2020 and higher savings for you after retirement. As always, check with your tax planning professional first to be sure.
Do not panic when it comes to stocks
Most people’s first instincts tell them to sell their stocks as they start to tumble. Instead, take a step back before making any major decisions. Evaluate all your stock options and decide what has the potential to rise further down the line. If you come across any stocks you want to unload, you could possibly sell the investment as a loss and report it on your next tax return. If you aren’t sure, consult with a financial advisor or other professional to guide you through the best options for your investment portfolio.
Taxes will always matter to people with significant wealth, so do not delay your tax planning. If you respond quickly, you could even benefit from the changing circumstances in the long term.