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If you haven’t filed your tax return yet because you owe the IRS money, the Treasury Department is offering you some relief. Most taxpayers now have an extra 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 taxes for up to 90 days, as long as they don’t owe more than $1 million to the federal government. There are no penalties or interest due if you wait. The Treasury Department is also giving corporations a deferment option for 2019 federal tax bills as high as $10 million.
Taxpayers who owe quarterly tax for 2020 receive a payment extension as well. Typically, first-quarter taxes are due on April 15. However, those payments can now be made as late as July 15 without penalty.
Up-to-date information about federal coronavirus tax relief measures is available on the IRS website.
Initially, the extension only applied to qualifying tax payments that were due to the IRS by the April 15 deadline. However, U.S. Treasury Secretary Steven Mnuchin announced March 20 that the federal government is giving taxpayers an extra 90 days to file their returns as well — moving Tax Day from April 15 to July 15.
“This deferment allows those who owe a payment to the IRS to defer the payment until July 15 without interest or penalties,” Mnuchin said in a statement. “Treasury and IRS are ensuring that hardworking Americans and businesses have additional liquidity for the next several months.”
Earlier in the week Mnuchin recommended that “Americans should file their tax returns by April 15 because many will receive a refund. Those filing will be able to take advantage of 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 bill for 2019? If so, you might consider calling the IRS to ask for an adjustment, especially if you’re temporarily out of work or facing a reduction in income due to the pandemic. There’s no guarantee that your request will be honored, of course, but it can’t hurt to try if you’re facing financial hardship.
It’s important to keep in mind that while some states have followed the federal government’s lead, not all states are offering a deferment option for taxpayers. Your state may still require you to pay your taxes by the normal April 15 deadline.
If you think you’ll need more than the extra 90 days to submit your tax return to the IRS, you can file for a six-month extension. Simply fill out and submit IRS Form 4868 to make the request before the July 15 deadline arrives.
Tom Wheelwright, CPA, CEO of WealthAbility, advises taxpayers to not be afraid to file for an extension if they need one. If you’re hiring a professional to file your taxes for you, Wheelwright encourages you to make sure your tax advisor is up to date with current tax legislation. “Remember,” Wheelwright says, “the quickest and easiest way to put money in your pocket is to lower your taxes.”
It may also be time to look for a new tax professional, according to Wheelwright, if your tax advisor isn’t lowering your tax obligation as much as IRS rules allow. Most of all, Wheelwright says, “if your tax advisor does not use up-to-date technology (so you don’t have to risk going to their office), it may be time to upgrade.”