In response to the Coronavirus (COVID-19) pandemic, the Treasury and IRS issued new guidance that calls for a tax deadline extension, moving the customary April 15 deadline to July 15, 2020. Read more to learn about the relevant details and how they impact your situation.
In March, the COVID-19 pandemic led the Treasury and IRS to delay when Americans are required to file their tax returns, calling for an automatic tax deadline extension to July 15, 2020 for your 2019 taxes. The three-month extension will automatically apply to calendar year filing individuals, inclusive of the self-employed, trusts and estates as well as C corporations.
However, taxpayers expecting a refund are still encouraged to file their tax returns as soon as possible so that they can receive their refunds; the average refund this year has topped $2,800, according to the IRS.
While the automatic tax deadline extension doesn't require you to file Form 4868 to request the extension, you still have this option if you need more time (specifically until October 15, 2020). Remember, as with all extensions you apply for, you'll still need to pay any estimated tax liability by July 15 or face underpayment penalties and interest charges.
To understand how individuals (including self-employed individuals, trusts and estates) and C corporations will be impacted by this tax deadline extension, read more below.
How are individuals affected by the tax deadline extension?
The tax extension deadline generally applies to all calendar year tax-paying entities, including individuals, self-employed persons, and trusts and estates. The Treasury and IRS announced the deferment of filing your federal tax return as well as specific federal tax payments. This delay in payment comes interest- and penalty-free, for 90 days, until July 15, regardless of the amount owed.
Furthermore, anyone who needs to make quarterly estimated tax payments also has until July 15 to submit these payments. This means your 2020 tax year first and second quarter estimated tax payments, previously due on April 15 and June 15, are now both deferred until July 15.
How are corporations affected by the extension?
Corporations that operate on a calendar year have also been granted an automatic extension to file corporate tax returns and pay any tax due. Like with individuals, this comes without interest or penalties for 90 extra days (April 15 to July 15) on any amount owed.
Will the extension delay my tax refund?
No. The IRS has said it expects to continue processing refunds as normal and encourages all taxpayers to file as soon as possible. Remember, the sooner you file, the sooner you'll get any refund owed to you.
Will the deadline for my state taxes also be extended?
Many states have made changes to their filing deadlines to align with the new federal tax deadline extension. However, be sure to check whether your state conforms with the new guidance.
Do I still need to make my 2020 tax year first quarter estimated tax payment by April 15?
No. The automatic tax extension deadline applies not only to 2019 tax returns but also to first quarter estimated tax payments for 2020. These amounts don't need to be submitted to the IRS until July 15, and this delay doesn't result in any penalties or interest on the delayed payments.
What is the last day to contribute to my retirement account for 2019?
As with other elements of the extension, individuals can wait to make 2019 contributions to their retirement accounts normally due April 15, 2020 until July 15, 2020. Consider using this extra time to set aside more money in your retirement accounts if you're able. You can contribute a maximum of $6,000 to an IRA for 2019, plus an extra $1,000 if you're 50 or older.
You don't need to wait to file your tax return to make this contribution, however. If you know how much you'll contribute by the tax deadline, you can count this on your tax return and make the actual contribution by the new deadline.
Does this extension also give me more time to contribute funds to my HSA or Archer MSA for 2019?
Yes. Similar to the extended time granted for making retirement account contributions, you may also make contributions to your HSA or Archer MSA by July 15, 2020 for the 2019 tax year. Keep in mind that to ensure accuracy on Form 8889, it’s often best to make any contributions prior to filing your tax return.