When COVID-19 landed on our shores and the Internal Revenue Service (“IRS”) extended the tax filing deadline to July 15, 2020, very few of us thought we would still be in the grips of a pandemic that only seems to be getting worse. Unfortunately, the country is still reeling from the devastation this virus has wrought on businesses nationwide. While time is running out, you are not up a creek without a paddle.
The Mortgage Interest Statement (“Form 1098”) is arguably the source of your two largest tax breaks. In general, the largest deduction for homeowners is the interest on their loans; this is particularly true in the Studio City, Sherman Oaks, Encino, and Tarzana areas, as the average home runs for substantially more than other areas of Los Angeles County. If you are single, you are eligible for up to $500k in deductions, while married couples who file jointly are eligible for up to $1M in deductions (assuming you purchased your home prior to December 15, 2017). If you purchased your home after December 15, 2017, you are able to deduct the interest on up to $750k on a second home. Homeowners can also deduct up to $10k in property taxes. Naturally, you can see why Form 1098 should be your number one priority.
Given that there are only two weeks left, you may not have the time to properly prepare your taxes; there is no reason to fret just yet. You can file for an extension to file your taxes, which will give you until October 15, 2020 to file them, with no penalties. There is an important caveat – the IRS still expects you to pay your estimated taxes by July 15, 2020; you will receive the difference back. If you can’t afford your estimated tax plan, contact the IRS to discuss their payment plans; make sure to file something to avoid penalties and interest.
Finally, now is an excellent time to get professional help from a tax specialist. The reality is that we don’t know what’s coming in the near future. Now, more than ever, we need to make sure we have enough cash-on-hand to survive another prolonged shutdown (not that it’s a foregone conclusion, but the possibility is enough to justify tightening our belts). As such, a professional will help you keep as much of your money as possible, which you may be grateful for if things go south quickly.
At the Chernov Team we understand that knowledge is power, and knowledge of how to keep your assets protected in uncertain economic times is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.
