20 Things To Know About the New Tax Deadline

In response to the coronavirus pandemic, the Internal Revenue Service has extended the deadline to file and pay any taxes owed from the original date of April 15 to July 15. If you’re planning on taking advantage of the new deadline, here’s everything you need to know. Last updated: July […]

In response to the coronavirus pandemic, the Internal Revenue Service has extended the deadline to file and pay any taxes owed from the original date of April 15 to July 15.

If you’re planning on taking advantage of the new deadline, here’s everything you need to know.

Last updated: July 2, 2020

It Could Be Especially Helpful for Those Who Have Experienced Job Loss

The extension to pay any taxes owed could especially benefit those who lost their jobs or have seen a reduction in pay due to the coronavirus pandemic. As of June 29, over 47% of Americans were without jobs, CNBC reported. Although that number includes those who have stopped looking for work, overall, the employment outlook remains bleak. “About a quarter of the workforce is still either unemployed, had their hours reduced, or had their pay cut,” Mark Zandi, chief economist at Moody’s, said in a note to CNN.

The July 15 Deadline Only Applies To Federal Income Taxes

It’s important to note that the July 15 deadline is for federal income taxes — it does not apply to income taxes you may owe your state.

State Tax Filing Dates Vary

Some states extended their tax deadlines to match the new Tax Day, but not all. Due dates across the country have varied from June 15 to July 30. Check with your state’s tax agency to find the correct deadline and make sure you aren’t behind.

You Have Until July 15 To File For Unclaimed Tax Refunds From 2016 and Later

Americans who failed to file income tax returns in previous years might be missing out on unclaimed tax refunds. Taxpayers typically have a three-year window of opportunity to claim a tax refund. For 2016 tax returns, the window now closes on July 15 of this year.

Compare: The Average Refund Check in Every State

The Extension Includes Your Estimated Tax Payments for the First and Second Quarters of 2020

“The extension is not just an extension to file, but rather an extension to pay,” said Gary DuBoff, a principal in the tax and accounting department at MBAF. “Most important is that the payment extension also incorporates the 2020 first and second quarter estimated tax payments that are due on April 15 and June 15, respectively. Failure to make these payments before July 15 will not result in any interest or penalty.”

The Extension Applies To Early Withdrawal Penalties

If you took an early withdrawal from a retirement account in 2019, you now have until July 15 to pay any penalty fees.

In Addition to the Income Tax Deadlines, Other Form and Tax Payment Deadlines Have Been Extended

According to Bill Smith, managing director for CBIZ MHM’s National Tax Office, the July 15 deadline now applies to a number of forms.

“For example, international forms like Form 5471 and 3520 — which are information returns, not income tax returns — were potentially not extended. IRS guidance makes clear they are,” he said. “Deferred like-kind exchanges have to be completed within 180 days of selling the exchange property. With coronavirus shutting down all real estate activities, people who were doing these deferred like-kind exchanges did not know if the 180 days was going to be extended, as it is not a tax return. Likewise, investing capital gains in a Qualified Opportunity Zone fund or investment has to happen within 180 days of selling the capital gains asset. Thankfully, the IRS extended both of these deadlines to July 15, along with a host of others.”

The new deadline also applies to estate and gift tax returns.

The IRA Contribution Deadline Has Been Extended

The IRS also extended the deadline to contribute to a traditional IRA, Roth IRA and Archer MSA to July 15. The annual contribution limit for the 2019 tax year is $6,000, or $7,000 if you’re age 50 or older.

Help: 9 Tax Tips Every Married Couple Must Know

The Same Rule Applies To Your HSA

The deadline for contributing to your health savings account has also been extended to July 15. You can contribute up to $3,500 if you have an individual plan and up to $7,000 if you have a family plan.

But Some Form and Tax Filing Deadlines Have Not Been Extended

The July 15 deadline does not apply to excise taxes and information returns — such as 1099 forms — and some payroll taxes, The Wall Street Journal reported. There was no extension for those filing deadlines, so they remained due on April 15.

Audits Have Been Delayed

The Wall Street Journal reported that the IRS generally won’t start new audits and will suspend in-person meetings with taxpayers under investigation through July 15.

Other Enforcement Actions Have Also Been Suspended

The IRS implemented a “People First Initiative” in late March to provide relief from compliance actions. Changes include suspending payments due on installment agreements from April 1 through July 15 and suspending seizure of properties via liens and levies over the same time period.

Tips: How To Avoid Paying Taxes Legally — and the 11 Craziest Ways People Have Done It

You Can Still Pay Back Any Money You Owe in Installments

If you’re still unable to make a large payment to the IRS, the option to pay back in installments is available for your 2019 return. These payment plans allow you to pay the taxes you owe within an extended timeframe. You are responsible for paying your taxes in full within this timeframe, and if you don’t meet the new agreed-upon deadlines, you could be hit with a lien or levy.

Tax Offices Are Open — But They Aren’t Your Only Option

Many tax preparation offices, including H&R Block, are open with additional safety measures in place, such as extra distancing between desks and chairs. You may also be able to drop off your tax forms for contactless assistance or speak with a tax professional virtually. In addition, you always have the option to file online using the tax preparation software or tool of your choice.

Tax Refunds Should Still Be Received Within 90 Days of Filing

The earlier you file, the earlier you will receive your refund — but the timeframe for receiving that refund will likely remain the same.

“The IRS usually will issue refunds within 90 days of receiving a tax return,” said Marc Wieder, co-leader of the real estate group at the accounting firm Anchin, Block & Anchin. “Assuming this doesn’t change by filing earlier than July, you would get your refund earlier.”

That Said, the IRS Will Pay Interest on Delayed Payments

The IRS closed down multiple service centers and offices and has been behind on mail, leading to a processing backlog, Business Insider reported. This has caused delays in refunds — but if your refund has been delayed, it could be worth the wait. The IRS has a 45-day grace period to issue refunds to taxpayers, after which your refund begins accruing interest. On June 24, the IRS announced that “interest on individual 2019 refunds reflected on returns filed by July 15, 2020, will generally be paid from April 15, 2020, until the date of the refund.” Interest will be paid at a rate of 3% or 5%, compounded daily.

Find Out: The Wildest Things Your Taxes Are Paying For

You Shouldn’t Miss the July 15 Deadline

While it’s fine if you’ve taken advantage of the extra 90 days, DuBoff doesn’t recommend filing any later than July 15.

“Once you get past July 15,” he said, “there will be a lot of pressure on accountants and tax preparers to get the job done, which puts pressure on them to perform in a much shorter and compressed time frame than normal.”

And Yet, Millions of People Still Have To File

As of June 29, 7 million Americans still needed to file their taxes, Business Insider reported. If you’re part of the group, be sure you file by the July 15 deadline.

Individual Filers Still Can Request an Additional Extension

Individual filers who won’t be able to file by the new extended deadline are still eligible to request an extension. To request an extension to Oct. 15, you will need to fill out Form 4868. You can file the form through your tax professional, tax software or using Free File on IRS.gov.

If You Miss the New Deadline and Don’t File For an Extension, You Will Be Hit With Penalties

“We urge clients to file their tax returns on time — July 15 for individuals, or October 15 with a tax extension,” said Mike Savage, CEO of 1-800Accountant. “Failure to file penalties are quite significant.”

Even if you can’t pay all that you owe by the respective deadlines, you should still file on time.

More From GOBankingRates

This article originally appeared on GOBankingRates.com: 20 Things To Know About the New Tax Deadline

Source Article

Next Post

Vanilla Ice Cancels Fourth of July Concert Following Backlash and Coronavirus Concerns

Thu Jul 2 , 2020
Vanilla Ice is listening to the concerns of his fans. The 52-year-old performer took to Twitter on Thursday ahead of his scheduled Fourth of July performance in Austin, Texas, to reveal that he had decided to cancel following backlash. Writing that he was moving the show to “a better date,” […]