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As a result of the Coronavirus Pandemic, the US Treasury and Internal Revenue Service have issued guidance on the filing of 2019 tax returns and have begun to provide a guide for 2020.
Here is what we know so far:
First, the tax filing deadline has been extended from April 15th to July 15th. In doing so, the IRS is not only giving individuals and businesses additional time to file their returns, but also to pay tax due without interest or penalties, regardless of the amount owed. As a taxpayer, there is no need to file any additional forms or contact the IRS to qualify for the automatic tax filing and payment extension. Many states, including North Carolina have followed suit, while others have issued guidance of their own. While North Carolina is extending the filing deadline, under current North Carolina law, interest will continue to accrue on underpayment. This is one major difference between the new rules around Federal and North Carolina tax filing for 2020.
While there is now additional time to complete your return, the IRS does urge those who are due a tax refund to file as soon as possible. While they are curtailing some operations, the IRS will continue to accept tax returns and issue refunds.
Did they change the estimated tax payment deadlines?
In addition to extending the filing and payment deadline, the IRS has also issued guidance on 2020 1st quarter estimated payments. Currently, no additional guidance has been issued on Quarter’s 2-4, however we do expect changes to be made, especially for the 2nd quarter.
- Confirmed 2020 Quarter 1 Estimated Tax Payment Deadline: July 15th, 2020 (traditionally April 15th)
- Pending 2020 2nd Quarter Estimated Tax Payment Deadline: Traditionally June 15th, 2020
- Pending 2020 3rd Quarter Estimated Tax Payment Deadline: Traditionally September 15th, 2020
- Pending 2020 4th Quarter Estimated Tax Payment Deadline: Traditionally January 15th, 2021
What about account contribution deadlines?
The IRS has also extended the ability to fund IRAs and Health Savings Accounts to the new deadline of July 15th. Note, prior to making contributions to these accounts you will first want to verify you are eligible to do so based on your level of income and filing status.
What if I still need additional time to file?
As is the case every year, taxpayers will continue to have the capability to extend filing their return past the filing deadline. Traditionally, the IRS grants a 6-month extension to October 15th. Per the IRS website, filing an extension beyond July 15th will only extend the deadline to October 15th, however, this may change as the situation continues to evolve. Note that unlike the automatic extension to July 15th, taxpayers will need to submit a request to request an additional extension.
Here at FSI, our tax team will continue to work diligently to complete our client’s tax returns. Our priority will remain in processing returns in the order in which we received tax preparation documentation, however, we may place preference on filing of returns for those who are due refunds.
We will continue to update this post and provide additional information as more guidance is provided by the IRS and state departments of revenue.
Related: 10 Financial Actions to Knock out During This Social Distancing Period