If you haven’t yet filed your tax return because you owe money to the IRS, the Treasury Department offers you some relief. Most taxpayers now have an additional 90 days to file their federal tax returns and pay their federal income tax, thanks to coronavirus relief measures.
IRS Tax Payment Extension Details
Taxpayers can delay paying their 2019 federal income tax for up to 90 days, as long as they don’t owe the federal government more than $1 million. There are no penalties or interest due if you wait. The Treasury Department is also offering businesses a deferral option for 2019 federal tax bills of up to $10 million.
Taxpayers who owe quarterly tax for 2020 also receive a payment extension. Typically, first quarter taxes are due on April 15. However, these payments can now be made until July 15 without penalty.
Up-to-date information on federal coronavirus tax relief measures is available at IRS website.
Initially, the extension only applied to qualifying tax payments due to the IRS by the April 15 deadline. However, US Treasury Secretary Steven Mnuchin announced on March 20 that the federal government was also giving taxpayers an additional 90 days to file their returns – moving tax day from April 15 to July 15.
“This deferral allows those who owe a payment to the IRS to defer payment until July 15 without interest or penalties,” Mnuchin said in a statement. “Treasury and the IRS are ensuring hard-working Americans and businesses have extra cash for the next few months.”
Earlier in the week, Mnuchin recommended that “Americans should file their taxes by April 15 as many will receive a refund. Those who deposit will be able to enjoy their refunds sooner.
For those who are short on cash during this crisis, a tax refund could provide a much-needed financial cushion. the average tax refund received in 2019 was $2,869 according to IRS records.
Other Factors Taxpayers Should Consider
Are you already making payments on your tax account for 2019? If so, you might consider calling the IRS to request an adjustment, especially if you are temporarily out of work or facing a reduction in income due to the pandemic. There’s no guarantee your request will be honored, of course, but it can’t hurt to try if you’re having financial difficulty.
It’s important to keep in mind that while some states have followed the lead of the federal government, not all states offer a deferment option to taxpayers. Your state may still require you to pay your taxes by the normal April 15 deadline.
If you think you need more than an additional 90 days to submit your tax return to the IRS, you can apply for a six-month extension. Simply complete and submit IRS Form 4868 apply before the July 15 deadline.
Tom Wheelwright, CPA, CEO of WealthAbility, advises taxpayers not to be afraid to ask for an extension if they need it. If you hire a professional to file your tax returns for you, Wheelwright encourages you to ensure that your tax advisor is up to date with applicable tax laws. “Remember,” says Wheelwright, “the quickest and easiest way to put money in your pocket is to lower your taxes.”
It may also be time to seek out a new tax professional, according to Wheelwright, if your tax advisor isn’t reducing your tax liability as much as IRS rules allow. Above all, says Wheelwright, “if your tax advisor isn’t using up-to-date technology (so you don’t have to risk going to their office), it might be time to upgrade.”