Most people are aware of the extended tax deadline of July 15, 2020, for filing 2019 tax returns. However, The Rules of Thumb blog from MoneyThumb wants to make sure that any concerns you have about this new tax deadline are addressed. Whether you are a CPA, accountant, bookkeeper, small business owner, or a regular Joe/Jane taxpayer, the questions and answers in an article at Kiplinger should put to rest any issues you have with this new deadline.
The article is written by Riley Adams, a CPA who works as a senior financial analyst at Google. He also runs a personal finance site called Young and the Invested. Below is the brunt of the questions and answers from the article. Follow this link to read the full article at Kiplinger.
"April 15 has become synonymous with the tax-filing day ... but not this year. Due to coronavirus concerns, the IRS has decided to give taxpayers until July 15 to safely complete their returns and file them. The announcement, made on March 20 via Twitter by Treasury Secretary Steven Mnuchin, doesn't have all the blanks filled in yet. But this is what we know so far:"
Q: My taxes are already done, and I know that I owe money. I should just wait until July 15 to file and send in my payment then, right?
A: If you have already completed your tax return, you should still send in your return as soon as possible but can delay submitting payment until the new July 15 deadline. By filing your completed 1040 earlier, you will have more time to make and plan for the potential financial moves necessary to arrange your payment. It also allows the IRS to review your tax return and agree to your tax liability. In the event you made an erroneous tax deduction, claimed a tax credit you should not have, or made some other arithmetic mistake, you will have more time to prepare in the event the IRS disagrees with the information stated on your return.
Q: What if I expect a refund, on the other hand? Should I file right away?
A: If you expect a refund, filing your tax return sooner is always better, because this puts more money in your pocket sooner. Waiting to file until the deadline provides an interest-free loan to the federal government and limits your ability to have access to your money. In current circumstances, the federal government would want you to file your return immediately in order to claim this refund. Doing so would provide more potential money to circulate in the economy and guard against an impending economic recession.
Q: Could this July 15 filing delay have any impact on me receiving my refund on time?
A: Much like any circumstance were waiting until the last minute could cause a rush and stress available resources, waiting until this new July 15 filing deadline could result in delays for receiving your tax refund. If you believe you will be owed a tax refund and you can prepare your own tax return or use tax software to help you, you are encouraged to do so immediately.
Q: In the past, I've heard you should file as early as possible if you're worried about scammers stealing your identity and claiming your refund. Is that still true?
A: Sadly, by delaying the deadline, this could result in greater potential for identity fraud. By allowing scammers more time to file a return and claim a refund on your behalf, the opportunity to defraud you of your refund is greater. As a result, filing as soon as possible is always recommended because even if you owe taxes, you will have until July 15 to submit payment.
In the event you expect a refund, the safest way to file your tax return is by e-filing your 2019 tax return and then opting to have your refund directly deposited into your bank account. This will get you your refund sooner and safer, assuming the provided info is correct. By e-filing, the IRS can process electronic tax returns and refunds much faster than it can handle paper returns and sending checks through the mail.
Q: I may need even more time than July 15. Can I file for an extension? If so, will the extension date be Oct. 15, or will it be even later?
A: At this time, it would appear that an extension to Oct. 15 is available per the IRS website. However, no specific guidance has been given since this announcement about any changes to an extension beyond July 15 to the usual Oct. 15 deadline. As a result, it may remain in place as of this writing, though this situation is rapidly evolving, and it could change at any moment. It might be best to view July 15 as the official deadline and prepare accordingly.
Q: Will the due date for my state tax return be delayed too?
A: In alignment with the decision to defer filing and paying your federal income taxes, many states have issued automatic extensions as well. They have done this in the hope of providing financial relief to Americans during the coronavirus pandemic. You will need to verify whether your state has made such accommodations by checking this list or checking directly with your state’s tax agency on their website.
Q: Can I wait until July 15 to make 2019 contributions to my IRA or HSA?
A: Yes. The IRS has confirmed that because the due date for filing federal income tax returns has been postponed to July 15, the deadline for making contributions to your health savings account or individual retirement accounts for 2019 is also extended to July 15, 2020.
Q: Do I still have to make an estimated tax payment for the first quarter of 2020 on April 15?
A: IRS Notice 2020-18 states that all estimated tax payments originally due on April 15 for the 2020 tax year do not need to be submitted until July 15. Further, there will be no penalties and interest assessed on these balances due.
Q: Clearly there are some details left to be worked out. How should I keep on top of things?
A: Watch major media outlets like Kiplinger, directly through the Treasury’s Press Releases page, or through the White House’s daily media briefings with the president and his staff.
Q: Has a push back Tax Day like this ever happened before?
A: It would appear no national deferment in the deadline has occurred before. However, large-scale natural disasters have delayed certain geographies from filing on the usual April 15 deadline in the past.
Hopefully, any questions you had about the extended tax deadline have been answered above, but if you find you still have concerns, leave us a comment below and we will do our level best to help find your answer. Also, The Rules of Thumb blog from MoneyThumb would really appreciate it if you shared this post on your social media page so your peers can have their questions about the extended July 15th tax deadline answered as well.