2020 is a year like we’ve never seen before. Under the effects of the COVID-19 outbreak, the healthcare world is facing unprecedented challenges and the financial landscape is changing quickly.
And though doing your taxes may seem less urgent in this landscape, COVID-19 will impact your taxes, too.
We put together this guide to keep you informed of the recent changes.
We wanted to make this as easy as possible for you, since many of you have so much on your plate right now.
Disclaimer: We’re not accountants or lawyers. Though the information provided here is often based on interviews with Joseph Smith, the founder of TravelTax.com, it’s a layperson’s perspective on travel nursing taxes. For more in-depth tax advice tailored to your unique situation, please consult an accountant, like the experts at TravelTax.com.
Recent changes that impact your 2020 filing
Updated April 2, 2020
New federal and state tax deadlines
One of the changes related to taxes that we see in 2020 is that, this year, April 15 is no longer Tax Day. On March 21, the federal government announced that it would extend the tax filing deadline to July 15, 2020. Due to the COVID-19 Outbreak:
The IRS urges taxpayers who are owed a refund to file as quickly as possible. For those who can’t file by the July 15, 2020 deadline, the IRS reminds individual taxpayers that everyone is eligible to request an extension to file their return.
An important note on this extension: it only applies to your federal return. State returns, which are often the more complex aspect of filing taxes for travel nurses, are subject to different due dates. Many states are still expecting residents to file by April 15th and still assessing penalties for those who file late.
As of April 2, 34 states, Washington DC, and Puerto Rico are following the federal government and have extended the filing date to July 15, 2020:
The following 6 states are not following the federal change and have determined different filing deadlines:
Payments Deadline: July 15, 2020
Filing Deadline: October 15, 2020
From the Colorado Department of Revenue:
The income tax payment deadline has been extended for all Colorado taxpayers by 90 days until July 15, 2020. Interest from the due date of the payment until July 15, 2020 is waived.
All income tax returns that were required to be filed by April 15, 2020 are granted an automatic six-month extension, and are due on or before October 15, 2020.
In addition, the deadline for estimated payments has also been extended for the 2020 tax year. The penalties for estimated payments are also waived until July 15, 2020.
This extension and these waivers do not apply to payments due pursuant to a notice of deficiency, notice of final determination, demand for payment, installment agreement, closing agreement, or other agreement or requirement to pay.
Filing deadline: July 20, 2020
From the Hawaii Department of Taxation:
Hawaii 2019 Income tax filing and payment due dates will be extended:
- Individual and Corporate Income tax returns for Tax Year 2019 due from April 20, 2020 to June 20, 2020 are extended to July 20, 2020.
- Individual Income tax payments for Tax Year 2019 due from April 20, 2020 to June 20, 2020 are extended to July 20, 2020.
- Taxpayers who are entitled to a refund or pay the Tax Year 2019 Income tax due by July 20, 2020 receive an automatic extension to file the associated return by October 20, 2020.
Filing deadline: June 15, 2020
From the Idaho State Tax Commission:
Income tax filing and payment deadline now June 15.
Filing deadline: July 31, 2020
From the Iowa Department of Revenue:
The Iowa Department of Revenue today extended the filing and payment deadline for several state tax types, including income tax.
The order extends filing and payment deadlines for income, franchise, and moneys and credits taxes with a due date on or after March 19, 2020, and before July 31, 2020, to a new deadline of July 31, 2020.
Filing deadline: May 15, 2020
From the Mississippi Department of Revenue:
The Mississippi Department of Revenue is providing relief to individual and business taxpayers due to the COVID‐19 pandemic.
The deadline to file and pay the 2019 individual income tax and corporate income tax is extended until May 15, 2020. The first quarter 2020 estimated tax payment is also extended until May 15, 2020. Penalty and interest will not accrue on the extension period through May 15, 2020.
Withholding tax payments for the month of April are extended until May 15, 2020.
Filing deadline: May 1, 2020
Payment deadline: June 1, 2020
From the Virginia Department of Taxation:
Any income tax payments due during the time period of April 1, 2020, to June 1, 2020, will now be due on June 1, 2020. This includes individual and corporate income taxes paid to Virginia Tax.
Late payment penalties will not be charged if payments are made by June 1, 2020. However, interest will still accrue, so if you can pay by the original filing due date, you should.
All income tax filing deadlines remain the same, including the May 1, 2020 individual income tax filing due date. However, Virginia does already have an automatic, 6-month extension to file (7 months for certain corporations). If you file during the extension period, make sure you still pay any taxes owed by June 1, 2020 to avoid penalties.
Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming do not have income tax.
The stimulus package and your taxes
The federal government has announced economic impact payments to offset the financial effects of the COVID-19 outbreak. Here’s the amount of those payments:
- $1200 to single individuals with an adjusted gross income of up to $75,000 annually
- $1200 to heads of household with an adjusted gross income of up to $112,500 annually
- $2400 to married couples with an adjusted gross income of up to $150,000 annually
- $500 for each qualifying child
Eligibility for those payments is based on income reported in your 2019 tax returns.
If you have not filed your 2019 tax returns, the IRS will look to your 2018 tax returns to determine eligibility.
If you have not filed taxes for either year, it’s recommended that you file as soon as possible:
The IRS urges anyone with a tax filing obligation who has not yet filed a tax return for 2018 or 2019 to file as soon as they can to receive an economic impact payment. Taxpayers should include direct deposit banking information on the return.
Outside of the economic impact payments, the stimulus package also includes other changes that may benefit you in 2020:
- Interest on federal student loans will be suspended for 60 days
- On next year’s taxes, everyone will receive a $300 charitable deduction credit
- You may take out a loan or withdrawal of up to $100,000 from your retirement account without penalty
- Individuals in collections will see installment agreements with the IRS suspended for 60 days
- All new liens are placed on hold until July 15
- No new audits are taking place before July 15
Change in W-4s
Another big change this year is that the federal government has created a new W-4 process. You’re likely used to filling out a quick W-4 that uses your marital status and the number of exemptions you have to determine your filing status. This year, you’re “basically doing a mini tax return on one page” to determine your withholding status, says Smith.
There’s an hour-long tutorial on how to fill out the new form from the IRS, but if that’s not your cup of tea, Smith has a VERY quick tip for you:
“The EASIEST advice. Want a really BIG refund (but a smaller paycheck)? Fill out your name, address, the marital status you use on your tax return, check box 2c and sign at the bottom. DONE! Disregard the wording of the questions as a traveler will never fit the descriptions. The label may be wrong but the math behind the declaration on the form fits.”
If your situation is a little more complicated or you want to explore options other than the quick fix, check out Smith’s entire post on your W-4 options (BONUS: it’s much more engaging than the IRS tutorial!).
Looking for more info on travel nursing wages? Check out our blog, The Complete Guide to Maximizing Your Travel Nursing Salary.