Many businesses face significant uncertainties as a result of the COVID-19 outbreak. Officials ordered most businesses to close, and the ones that remained open are struggling to keep up sales while maintaining health standards. At this point, a serious economic downturn seems avoidable. However, the government is taking drastic action to support businesses and individuals to mitigate the impact. The IRS wants to minimize the burden on taxpayers, so they decided to implement a universal tax deadline extension. The tax extensions will give struggling taxpayers more time to pay taxes, and individuals have more time to file personal returns too. Hopefully, the IRS changes will give struggling businesses a fighting chance at surviving an economic slowdown.
The IRS first announced these extensions in IRS Notice 2020-17, but they expanded the effort even further. This list has the most up-to-date information on the tax changes due to COVID-19.
The tax deadline extension touches almost every aspect of this year’s tax calendar. These are the major bulletins.
Personal Filing Deadline
One of the major coronavirus tax deadline extensions is the extension of the personal filing deadline. Under a recent order, the April 15th tax deadline has been delayed until July 15. This gives taxpayers a 3-month extension on their taxes and enables taxpayers who have been affected by the coronavirus to file their taxes on July 15 without penalty or interest.
Relief for Pass-Through Businesses
This 3-month extension can help all kinds of businesses, including C corporations who owe $10 million or less. Pass-through entities, like S Corporations, partnerships, and LLCs, usually have to pay taxes by March 16th. However, for entities that didn’t file yet, the extended tax due date is September 15.
Other Extended Deadlines
The tax deadline extension also covers returns for estates, trusts, gift tax returns, and foreign bank accounts. These returns are also due on July 15th.
If you’re not ready to file by July 15th, you can request more time. Requesting an extension gives you until October 15th to file your return (the regular extension deadline as of the date of publishing, has not yet been extended). However, you must submit your extension request before the July 15th deadline. Keep reading for more information on extensions requests.
2019 Tax Payment Deadline
Income tax payments are due on July 15th. The extended due date also applies to taxes due for the tax year 2019. The federal government is encouraging states to extend their tax deadlines as well, though this will vary on a state-by-state basis. Many states are postponing their tax deadlines, but check with your state’s tax agency for more updates. For example, California states that only taxpayers affected by COVID-19 are able to pay their taxes by the extended deadline without penalty. What proof is required is still undetermined.
If you conduct business in multiple states, you may want to talk with your tax advisor or SALT (state and local taxes) accountant about the latest updates in the states where you conduct business.
Q1 2020 Estimated Tax Payments
Many sharing economy businesses need to pay estimated taxes. Payments are normally due April 15, June 15, September 15, and January 15. Under the current order, estimated tax payments for the first quarter which are normally due April 15, have also been delayed until July 15. There has been no word of yet, how this delayed payment schedule will affect the second quarter payment which is due June 15. The IRS could also adjust the deadline for future payments but, so far, 2020’s other quarterly due dates will remain the same.
Oddly enough, as the rules stand the second quarter payment is due before the extended first quarter.
IRA Contributions
The IRS is also pushing back the deadline for contributions tax-deductible retirement savings accounts, like IRAs and healthcare savings accounts. Taxpayers have until July 15th to make retirement account contributions. After July 15th, taxpayers must deduct any IRA contributions from their 2020 tax returns. At first, there was some confusion on this issue. However, the IRS recently clarified that this deadline would also be extended. This ruling covers tax-deductible contributions to IRAs, Roth IRAs, health savings accounts, and Archer MSAs.
File An Extension
Like we mentioned above, some businesses may need more time to recover from the economic effects of the coronavirus, in which case they can file an IRS form 4868. Taxpayers must request extensions before the new tax deadline of July 15. When filing an extension, it is important to understand that the extension is to delay the filing of your tax return, and doesn’t delay the due date of your tax bill. If you need more time to pay your tax bill, you must contact the IRS and set up an installment agreement. You can file an extension request online via the IRS website or through your tax advisor.
If you request an extension, you will have an extra six months to file your tax return. However, the six-month countdown will start from the regularly scheduled April 15th deadline. The IRS extension does not affect the deadline for extended returns, so you still have to file by October 15th.
Filing Your Return
Taxpayers don’t have to do anything to take advantage of the delayed tax due date. You don’t have to pay your taxes until July 15th. It’s as simple as that! You don’t have to worry about any penalties or interest because the deadline is universally extended this year.
However, the IRS still wants taxpayers to file in a timely manner. They’re still processing returns, so you can file earlier if you’d like. Taxpayers that are receiving a refund can get their money in as few as 21 days by filing electronically. If you’re waiting for a refund, click here to learn how to check the status of your return.
Get Help With Your Taxes
In trying times like these, Sharing Economy business owners need all the support they can get. The experts at Shared Economy Tax can help guide you through this time of crisis. Our experts are standing by to answer any questions about the new IRS tax deadline extensions and much more. Get started today with a free one-on-one strategy session a certified tax pro. You can also sign up for our newsletter to follow all the latest coronavirus tax tips, just enter your email into the form below.