As the world braces for a recession brought about by the COVID-19 outbreak, the 2020 tax season is taking on new urgency. If you’re expecting a return, it could come at a life-saving moment when various industries are cutting hours or laying off employees. If you’re expecting to owe, you might be worried about how you’ll afford an extra payment when your budget is already strained. This past Tuesday, the U.S. Treasury announced a 90-day delay for federal taxes, and there's been talk of other extensions. So what does that mean for you?
What Is The 90-Day Tax Payment Delay?
The payment delay applies to individual taxpayers who owe less than $1 million in federal income tax. It means you have an extra 90 days from April 15th to send the IRS your payments, with all interest and penalties waived until the period ends. Yes, that means that the latest you can pay your taxes is July 15th, but the April 15th filing deadline still stands.
But if you’re not planning on doing your own taxes, you’re having trouble gathering all your documents right now, your preferred CPA doesn’t do things virtually, or you simply don’t want to worry about filing during the middle of a stressful pandemic, you can still apply for an automatic extension on filing. That would make your new filing deadline October 15th, 2020 — but keep in mind that extending the filing deadline is just that, and doesn’t further extend your payment deadline. If you’re going to owe, you’ll have to estimate how much and start making payments before you file in October.
This is all, of course, if further delays and extensions aren’t enacted. The Hill has reported that the American Institute of CPAs (AICPA) is encouraging the Treasury Department to extend the filing deadline as well. The payment delay isn’t particularly helpful if you’re expecting a refund or have already made your tax payments — whether the government will adopt further measures to help struggling Americans remains to be seen.
But What About State Taxes?
Unfortunately, most states at this point have not announced a filing extension or payment delay. California has pushed back the filing deadline for individuals and businesses whose ability to file on time may have been affected by COVID-19, and Connecticut and Maryland have extended the deadline for certain businesses. South Carolina tax returns and payments are now due by June 1st.
Many states have announced that they are prepared to follow the example of the IRS; if the filing date for federal taxes is extended, they would delay state deadlines too. Representatives from New York state have called for the IRS to extend the filing deadline.