COVID-19

IRS gives taxpayers a break and extends its deadlines

Probably the last thing you want to have to worry about in the midst of a pandemic is the IRS. Surprisingly, the IRS agrees. It has postponed most of its tax filing and payment deadlines.  

Who qualifies for the extensions? 

The extensions apply to virtually all taxpayers. This includes individuals, partnerships, corporations, trusts and estates, and nonprofits.  

Extra time to file your 2019 tax return

If you haven’t filed your 2019 tax return yet, don’t worry. You have lots more time to do it.  

You now have until July 15, 2020, to file most tax returns for 2019 that were due April 15, 2020, through July 15, 2020. The list includes: 

  • Individual income tax returns: Form 1040, U.S. Individual Income Tax Return, 1040-SR, U.S. Tax Return for Seniors, 1040-NR, U.S. Nonresident Alien Income Tax Return, 1040-NR-EZ, U.S. Income Tax Return for Certain Nonresident Aliens With No Dependents, 1040-PR, Self-Employment Tax Return – Puerto Rico, and 1040-SS, U.S. Self-Employment Tax Return. 
  • Corporation tax returns: Form 1120, U.S. Corporation Income Tax Return, Form 1120-S, U.S. Income Tax Return for an S Corporation, and all other Form 1120 series returns. 
  • Partnership tax returns: Form 1065, U.S. Return of Partnership Income. 
  • Estate and trust income tax returns: Form 1041, U.S. Income Tax Return for Estates and Trusts and all other Form 1041 series returns. 
  • Nonprofit tax returns: Form 990, Return of Organization Exempt from Income Tax, Form 990-EZ, Short Form Return of Organization Exempt from Income Tax, Form 990-T, Exempt Organization Business Income Tax Return, and Form 990-PF, Return of Private Foundation. 

Note that you have until July 15, 2020, to file your 2019 tax return, which does not necessarily mean you should delay filing it until them. If you owe the IRS money, there is no reason to file early. But, if you expect a refund, don’t delay. The earlier you file your return, the sooner you’ll get your refund. 

Extending time to file 2019 returns beyond July 15

If you need even more time to file your 2019 return past July 15, you can still get it. If you file an extension by July 15, you have until the extension due date to file your return. This is six months after the original April 15 filing date for the return.  

For individual returns, the filing extension deadline moves to October 15, 2020. Nevertheless, you still have to pay any tax due by July 15. If you don’t, you’ll have to pay a late payment penalty. 

You can get an extension automatically by filing IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. 

Extra time to make tax payments

The IRS is also giving individuals and businesses extra time to make 2020 tax payments. You now have until July 15, 2020, to make the following payments. If you fail to make these payments by July 15, the IRS will assess late payment penalties and interest starting July 16. 

2019 taxes due: You have until July 15 to any tax due for any of the returns listed above. For example, if you owe income tax for your 2019 Form 1040, you don’t have to pay it until July 15. 

2020 estimated tax payments: You ordinarily pay estimated taxes paid four times per year: April 15, June 15, September 15, and January 15. The IRS has postponed the first two quarterly payments for 2020 until July 15. For example, if you owe $10,000 in estimated tax for 2020, you can wait until July 15 to make your first two $2,500 payments.  

2019 IRA and HSA contributions: You have until July 15 to make contributions to an IRA or Health Savings Account and apply it to your 2019-year taxes. 

2020 self-employment taxes: When you’re a self-employed independent contractor, you must pay a 12.4% Social Security tax on up to $137,700 in net self-employment income for 2020. You ordinarily pay this tax as part of your quarterly estimated tax payments to the IRS. You may defer 50% of your 2020 Social Security taxes until the end of 2021 and 2022. If you choose to do this, you must pay 25% of the deferred amount by December 31, 2021, and 25% by December 31, 2022. 

2020 employer payroll taxes: If you have employees, you may defer paying 50% of the employer share of their Social Security and Medicare taxes until the end of 2021 and 2022. But you need to continue to file your quarterly employment tax returns and pay at least 50% of the payroll taxes due on the regular due dates. 

Postponement of time to make IRS filings 

You have until July 15, 2020, to make all types of IRS filings, even if they were due earlier. These include: 

  • Filing a U.S. tax court petition 
  • Filing a claim for refund or credit of any tax 
  • Bringing suit for a claim for refund or credit of any tax, and 
  • Filing various tax elections, such as electing to have your corporation taxed as an S corporation 

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Business Insights and Ideas does not constitute professional tax or financial advice. You should contact your own tax or financial professional to discuss your situation.