The IRS has announced that tax deadlines for both tax filings and tax payments are being automatically moved from April 15th to July 15th, 2020.
Here's what you need to know:
The filing deadline for individual income tax returns will be July 15, 2020.
Individuals who owe the IRS money will be able to defer up to $1 million in payments for 90 days without interest or penalties. The new effective payment due date is July 15, 2020.
Corporations who owe the IRS money will be able to defer up to $10 million in payments for the same 90 days without interest or penalties.
The delay also includes first quarter, 2020 estimated tax payments for individuals. These payments are now due on or before July 15, 2020. This estimated payment delay does not apply to corporations.
What it means for you:
While the federal government grants you an additional 3 months to pay your 2019 taxes, you may wish to file an extension or still file your tax return by April 15. Here are some thoughts on different situations.
Do you anticipate a refund? For now, the IRS is issuing refunds as normal. For e-filers, refunds are often sent in less than three weeks. If the IRS is forced to scale back its operations for safety reasons, your refund could be delayed.
A better solution: file an extension. If you cannot complete your tax return by April 15, consider filing an extension, even with the Treasury Secretary's announcement. This moves your filing deadline to October 15. In the case of an extension under these new rules, your tax return would be due on or before October 15, 2020, but your tax payment is now due on or before July 15, 2020.
What about the audit window? The IRS normally has three years to audit a tax return. The three-year window to audit a return typically starts on either the tax return due date or the filing date, whichever is later. If shortening the audit window is important to you, consider filing sooner versus later as no one is clear what these delays in filing will do to audit rights.
What will states do? States are rolling out their own guidelines for extensions. Some are waiting on the IRS, while others are acting independently. Since most states require copies of federal tax return information, be prepared to still file by April 15. Remember, even if you wait until later to file your federal return and pay your tax, you may have to file your state and/or local return sooner.
What if I get a penalty anyway? Affected taxpayers subject to penalties and additional tax despite this relief may seek a waiver of them.
Rest assured, as the rules and deadlines change, updates will be provided. In the meantime, please stay safe during this challenging time.