Due to the coronavirus pandemic, the IRS recently announced a 90-day tax payment extension in the U.S. For most Americans, it can be confusing as to what it covers and what the extension means.
The coronavirus pandemic is the reason why tax day has been moved to July 15, 2020. Including in this change is the filing and payment deadline. Returns and processing refunds are still accepted by the IRS and tax preparers are still open to help you get your important refunds.
Here is what you need to know about the new tax deadline as a result of COVID-19:
COVID-19 tax deadline guidelines have been announced by the Treasury Department as of March 20, 2020. It allows certain taxpayers and businesses an additional 90 days for their 2019 tax liability to be filed and paid. The key dates are the following:
• Tax return deadline - Tax filing for all taxpayers is now due on July 15, 2020. You can request an extension to October 15, 2020, if you think you need more time.
• Tax payment deadline - Taxpayers can delay their IRS payment until July 15, 2020, if income taxes for 2019 are owed. If you pay before this deadline, you will not owe interest or penalties.
For additional information, here are some frequently asked questions (FAQ) to help you out:
Q: Who is qualified for the tax filing and payment deferral?
A: The special coronavirus tax extension is available for the following eligible type of filers:
• Individual Form 1040 filers
• Corporations filing Form 1120
• Trusts and estates filing Form 1041
• Fiscal year partnerships, associations, and companies with April 15, 2020 (uncommon) due dates.
Q: If I want to delay my filing and tax payment, what do I need to do?
A: Your tax return or extension must be filed by July 15. When you file, the 90-day tax payment deferral itself is automatic. This means for 90 days, interest and penalties are automatically waived and won’t accrue for taxpayers and businesses that are qualified until after July 15.
Q: What should I do if I need more time to prepare my return?
A: To request an extension by July 15, 2020, you must file Form 4868. You will have until October 15 to file your return through this extension but your payment would still be due by the payment deadline extension, July 15, 2020.
Q: Does this new affect me if I’m getting a refund?
A: If you receiving a refund, it should not affect you in any way. Your refund will still be sent to you within the normal time period according to the Treasury Department.
Q: This deferral covers what types of payments?
A: Income tax payments, and any normally associated interest and penalties including failure-to-pay penalty are covered by it. For the 2020 tax year, it also covers estimated tax payments due on April 15, 2020.
Q: How much can a taxpayer defer?
A: The amount of tax payment you can defer has no limit.
Q: Does this deferral apply to estimated tax payments for the year 2020?
A: It will be based on the payment date.
• First-quarter 2020 estimated tax payment – this estimated tax payment is included in the deferral which is due on April 15, 2020.
• Second-quarter 2020 estimated tax payment - This tax payment due on June 15, 2020, is not included in the deferral. Furthermore, the penalty for failure to make estimated tax payments for 2019 is not waived nor deferred.
Q: Is this deferral also applicable to my state tax return?
A: Guidance about deadlines are being issued by states. You may look up “State income tax returns impacted by the coronavirus (COVID-19)” for more information.
Q: Does this announcement mean I don’t have to pay taxes for 2019?
A: No, the purpose of the deferral is only to extend the due date of when your tax liability is due. Starting July 16, 2020, interest and penalties will again accrue on outstanding tax liabilities.
Visit your nearest tax preparer office if you need help in navigating the changing tax landscape. A tax professional can help you prepare your taxes for you to help ease the pressure off your shoulder, especially during this difficult time.
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