Due to the increasing number of Coronavirus (COVID-19) cases, the IRS has provided some relief to taxpayers (and tax preparers!) by extending the filing and payment dates for 2019’s tax season. Tax Day has officially been extended to July 15th for all returns and payments that were due on April 15th, 2020.
All the info contained in this post is in regards to federal taxes. Each state is independent and doesn’t have to fall in line with the IRS. You can check how your state is handling here.
What You Need to Know About Filing Your 2019 Taxes
This is an automatic extension, no additional forms need to be filed. Please note that this 90-day grace period is only for returns that were due on April 15th. If you haven’t filed your S-Corporation or Partnership return(s) that were due on March 16th, get them filed as soon as possible.
Even though the IRS has extended the filing deadline, we do not think you should delay filing unless you absolutely must.
What Filing for an Extension Looks Like in Light of Tax Season Being Extended
If you were planning on filing an extension anyway, or always file an extension, I suggest still getting that filed by April 15th, as normal, just to keep a routine and sense of normalcy. At this point, it’s not known whether or not filing an extension will give you until October 15th to file or January 15th.
What You Need to Know About Paying Your Taxes
This is an automatic extension, and no additional forms need to be filed to take advantage. Please note that this extension is only for payments that were due on April 15th. Please make sure to check if your state has extended payments here. The IRS has also extended the due date for Q1’s payment to July 15th. Q2’s payment is still scheduled to be due in June.
What if I’ve Already Made My Payment?
If you’ve already scheduled your payment, you can easily cancel it.
What if I Need an Installment Agreement?
It’s still possible to file for an installment agreement for 2019’s taxes if you won’t have all of the funds ready to go by July 15th.
Even if you don’t need an installment agreement now, don’t be shy about setting one up in the future if you find yourself severely impacted by the downturn in the economy. Yes, there are penalties and interest for doing so. However, these fees are minimal in comparison to not having enough cash on hand.
The IRS’ minimum payment for an installment agreement is generally your tax balance divided over seven years. You can either choose the minimum amount, a higher amount, or a lower amount. In order to qualify for a payment lower than the minimum, you have to show financial hardship.
There’s no penalty for paying off the balance early, too! So if you signup for an installment agreement due to a general sense of uncertainty in the world and economy, then in a few months or so things recover and go back to normal, you can totally just pay off everything you owe at that point – no harm, no foul.
How The 90-Day Extension Affects Your IRA Contributions
It appears as though the deadline for contributing to your Traditional or Roth IRA has also been extended to July 15th as well. A few key things to watch out for are:
- Your IRA may automatically mark any contributions made after April 15th as being a 2020 contribution – make sure you reach out and have it flagged as a 2019 contribution
- If you send in a check, write “2019 Contribution” on the check
- If you pay online, you might need to get on the phone with the bank to ensure it’s logged correctly
Even though everyone is likely feeling some financial insecurity right now, it’s the time to make some money moves.
Please reach out, we’d love to help!
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Countless assumes no liability for actions taken in reliance upon the information contained herein.