COVID-19 & Taxes: Here’s What You Need to Know
With COVID-19 (also known as coronavirus) making such a big impact on our country and economy right now, it’s difficult to focus on anything else. When people’s health and financial well-being are at stake, things can seem dire. It can be easy to overlook annual tasks like filing and paying your taxes. However, it is more important than ever to know where you stand regarding your taxes.
We’ve compiled some of the most frequently asked questions regarding COVID-19 and taxes and answered them here. As more announcements are made, we’ll be sure to keep you updated.
Have any federal tax filing deadlines changed because of COVID-19?
On March 20, 2020, Treasury Secretary Steve Mnuchin announced that Tax Day was moving from April 15 to July 15, 2020. This means all taxpayers and businesses will have the ability to file and make payments by July 15 without incurring penalties or interest.
If you need any help preparing your tax return, check out our handy individual tax prep checklist.
What about state income tax deadlines?
For all 41 states with personal income tax, the income tax deadlines have been pushed back due to the coronavirus crisis. Most of these states have pushed their income tax deadline (both for filing and payment) to July 15, 2020. However, there are a few exceptions including:
- Colorado, where the payment deadline has been pushed back to July 15 but the filing deadline has been pushed further to Oct. 15
- Hawaii, where the payment and filing deadlines are both July 20
- Iowa, where the payment and filing deadlines are both July 31
- Mississippi, where the payment and filing deadlines are both May 15
- Virginia, where the payment deadline is June 1 and the filing deadline is May 1
You should check with your state taxing authority if you’re dealing with estimated quarterly taxes. These deadlines may not apply to those specific payments.
Will I be able to defer my federal tax payments because of COVID-19?
On March 17, 2020, Treasury Secretary, Steven Mnuchin, announced that individual taxpayers will be able to defer up to $1 million in federal tax payments to the IRS for 90 days. This deferment is offered due to the impact of COVID-19. The threshold amount of $1 million for individuals was set to help cover many small businesses and pass-through entities. Corporations should be able to defer up to $10 million. During this three-month deferral period, the IRS will not subject taxpayers to interest and penalties.
The IRS released guidance on this tax payment deferment on March 18, 2020. The guidance confirms that individuals and corporations can defer payments that would have been due April 15 until July 15, 2020. The $1 million limit for individuals applies to both single taxpayers and married couples filing jointly. The deferment includes both payments for 2019 taxes due and payments for federal estimated income tax payments due for the 2020 tax year.
This deferment does not apply to state tax payments. You’ll need to check with your state taxing authorities to see if any deferral options are being offered.
Can I get an extension on filing my federal taxes?
As always, if you do not believe you will be able to file your taxes by the new filing deadline of July 15, your best bet is to request an extension. You can file for a six-month tax extension by using Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. Once the IRS has reviewed and approved your extension, you should have six months to file your federal tax return. Be sure to file your extension by July 15, 2020.
Why should I file ASAP now more than ever?
If you’ve found your income negatively affected by COVID-19 and you believe you deserve a tax refund, filing your return ASAP could offer you refund money that would help you out. As of Feb. 28, 2020, the average refund this tax season was about $3,064. Extra money in the bank could really make or break your ability to pay rent or your mortgage. It could even help you grab supplies to support a quarantine or any social distancing exercises.
While you can always go the route of filing a paper tax return, keep in mind that electronic tax returns are processed quicker than paper returns. This generally means you’ll get any refund faster. Another plus of electronic tax returns? They eliminate the need for you to go to the post office, which supports the CDC’s recommendation of social distancing.
Will my tax refund be delayed by COVID-19?
While it’s possible that the impact of coronavirus could delay refunds, there hasn’t been official word on whether taxpayers should expect any delay on their tax refunds.
If you’re not sure where your tax refund is, you can always use the IRS’s “Where’s My Refund?” tool.
Is there any tax debt relief being offered in the face of COVID-19?
Yes, the IRS announced its People First Initiative on March 25, 2020. This initiative includes relief efforts to help those with tax debt across the country. Read more about it in our COVID-19 Tax Debt Relief blog post.
What do I do if I need help with my taxes?
Taxes can be confusing even when there isn’t a major virus impacting the country. If you need help, reach out to a trustworthy tax professional. While you may want to avoid physically going to a CPA office, you always have the option of remote tax professionals like ours. The Tax Defense Network team is always available by phone to help you with tax matters from personal tax prep to tax debt relief.
This blog post was last edited on April 8, 2020.
*Read the original post on our Tax Defense Network blog