Economy & Policy

Extending The Tax Deadline For COVID-19 – What It Means For You in 2020

In the previous week, Treasury Secretary Steven Mnuchin announced some adjustments to the 2019 tax submitting deadline. Rumors of an prolonged tax deadline had been swirling for just a few days. Earlier, Mnuchin stated he supported extending the deadline past April 15 to assist present some reduction to taxpayers whose lives and incomes are being impacted by the COVID-19 pandemic.

On March 18, 2020, the IRS officially announced that it’s pushing the due date for making tax funds to July 15, 2020. Two days later, the company confirmed it was additionally pushing again the tax submitting date 90 days, giving folks a further 90 days to file and pay taxes owed for the 2019 tax year.

While extra particulars are probably forthcoming, that is what they’ve introduced up to now.

No Extension for March 15 Tax Filing Deadline

Small business filers (and their tax preparers) have been hoping for an extension of time to file Form 1065 and Form 1120-S. These are the kinds used to file tax returns for partnerships, multimember LLCs, and S companies.

But there was no official announcement earlier than that deadline, so these companies nonetheless needed to file by March 15 or face late submitting penalties. These entities had the possibility of requesting an extension, giving them a further six months to file a return. However, the deadline to file their tax returns remained March 15, 2020.

Business homeowners who missed that deadline ought to attempt to file as quickly as potential to reduce late submitting penalties.

90-Day Extension for Tax Returns Due April 15, 2020

Individual taxpayers who file Form 1040 and companies that file Form 1120 should sometimes submit returns and pay any tax due by April 15.

Initially, in his March 17, 2020, briefing with reporters, Mnuchin defined that the IRS would enable some taxpayers to defer funds due on that date. However, taxpayers would nonetheless must file their returns by the typical deadline.

The preliminary resolution additionally set a cap on the quantity of funds people and married {couples} submitting joint returns may defer. Individuals who owed $1 million or much less and companies that owed $10 million or much less for the April 15, 2020, submitting deadline may postpone cost of their tax invoice by as much as 90 days, till July 15, 2020. However, when the Treasury Department determined to increase the submitting deadline as nicely, it eliminated these caps.

Now, regardless of how a lot you owe, the IRS is not going to cost late cost penalties or curiosity so long as you pay what you owe by the new July 15, 2020, deadline.

There’s a second estimated tax cost due throughout the 90-day deferral window. Second-quarter 2020 tax estimates are due on June 15, 2020. The IRS hasn’t indicated that quantity is eligible for deferral, so for now, assume you could make that cost on time. There is a Senate proposal in the works that will prolong all estimated tax funds for the 2020 tax year to October 15, 2020, however that invoice continues to be into account.

The reduction doesn’t prolong to the cost or deposit of every other sort of federal tax, similar to an employer’s payroll tax deposits or excise taxes.

How the 90-Day Tax Payment Extension Impacts You

With just a few weeks left earlier than the common April 15 submitting deadline, many taxpayers have already filed returns and paid the tax owed. In that case, you probably can’t get a refund of the taxes you’ve already paid.

However, for those who haven’t but filed or paid the tax you owe, you have got two choices.

  • Request an Extension. If the pandemic is making it troublesome to assemble the info wanted to file your return, you’ll be able to request a six-month extension. You might also must file an extension in case you have all of the needed info however merely aren’t in a position to file. Individual taxpayers request an extension utilizing Form 4868. Corporations request an extension utilizing Form 7004. The extension pushes your submitting deadline again to Oct. 15, 2020, however you continue to should pay the tax you owe by July 15, 2020.
  • File Your Return. If you have got all the info it is advisable to file your return and also you’re ready to take action, there’s no motive to increase. You can file utilizing on-line tax software like TurboTax and H&R Block or a certified tax preparer. File your return as you usually would. If you owe any tax due, you now have an additional 90 days to pay your tax invoice for those who owe money. If you’re anticipating a refund, the IRS says refunds is not going to be affected. If the IRS owes you a refund, file as quickly as potential so you’ll be able to acquire it.

Remember, Mnuchin’s announcement solely pertains to federal earnings tax returns. If you reside in a state with a state earnings tax, it’s as much as every state to resolve what to do. They might prolong the deadline for state earnings tax returns or depart the deadlines as is. Since most state earnings tax returns begin along with your federal return and make changes from there, you’ll have to file your federal return to finish your state return. Check along with your division of income for state-specific steering.

Final Word

The thought of transferring the tax deadline again and giving taxpayers extra time sounds simple. But it’s one with many complicated concerns. The scenario is altering quickly, so maintain in contact along with your tax preparer. No doubt, they’re watching the scenario intently and might present recommendation particular to your distinctive circumstances.

Have you already filed your tax return? How will the 90-day extension affect you?

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