What you need to know now!
The tax deadlines move from the April 15th tax deadline to July 15th, per U.S. Treasury Secretary Steven Mnuchin. These announcements were made on Tuesday, March 17, 2020 and Friday March 20, 2020 with payment and penalty delays confirmed by an IRS notice.
Here is what you need to know
- While the filing deadline for individual income tax returns, Form 1040, is April 15, 2020 per IRS notice 2020-17, published this Wednesday, the Treasury Secretary announced moving Tax Day to July 15, 2020 on Friday March 20, 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.
* Late Breaking Alert: At 9:30 CST, Friday March 20, 2020 Treasury Secretary, Steven Mnuchin tweeted the following: “At @realDonaldTrump’s direction, we are moving Tax Day from April 15 to July 15. All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.” The IRS retweeted this message.
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.
You anticipate a refund. For now, the IRS is still 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: 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 it is not 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.
For more information, Rosillo & Associates can assist you! Call at (305)477-5671, or visit www.RosilloCPA.com
Rosillo & Associates is located in 7950 NW 53rd St., Suite 221, Doral FL 33166