As we navigate these unprecedented and extraordinary times, I wanted to say on behalf of our whole firm that we hope you and your family are safe and healthy. We will get through this, but between now and that time, please let us know if there is anything we can do.
With news of the pandemic changing daily and some major new government economic policies being rolled out, I wanted to keep you up to date on the changes and how this will affect your tax strategies and returns.
The Treasury Department announced the following covid-19 tax deadline guidelines on March 17, 2020, giving certain taxpayers and businesses an additional 90 days to pay their 2019 tax liability. Here are the key dates.
Tax return deadline – April 15, 2020. Your tax filing will still be due on this date. If you need more time to prepare your return, you can request an extension. Please note that the government deferral of penalties and interest is not an extension to file the returns. It is merely an extension of time to pay your tax liability and an abatement of any associated penalties and fees. This is huge if you owe money and has never been done before. Just remember that you will still need to file the extension on April 15th.
Tax payment deadline – 90 days after April 15, 2020. If you owe income taxes for 2019, you can delay your IRS payment until this time. Again, you must file your return or file for an extension by April 15 to be eligible for the delayed tax payment. You will not owe interest or penalties if you pay before this deadline.
Two types of filers are eligible for to use the special coronavirus tax extension. Individual Form 1040 filers and certain business filers – C Corporations (Form 1120) are eligible for the 90-day tax payment deferral. Partnerships (Form 1065) and S Corporations (Form 1120S) generally do not pay taxes directly when they file their informational returns. Income from these businesses is passed through to their shareholders or partners who would be eligible for the 90-day deferral on taxes owed on passthrough income. The entity itself does not owe so is not impacted by the new rules.
Not all individual or corporate taxpayers will be able to defer penalties and interest. Form 1040 filings with tax liabilities equal to or less than $1 million and C Corporations (Form 1120) with tax liabilities equal to or less than $10 million can benefit. Taxpayers and businesses will be required to pay tax liabilities that exceed these amounts.
These rules do not affect you if you’re receiving a refund. The Treasury Department says you should still expect to receive your refund within the normal time period (9 out of 10 are received within 21 days of electronic filing).
I will continue to update this blog as things change with regard to this new landscape.