Every day, it seems, the news gets scarier and scarier as the world weathers the storm of the COVID-19 pandemic.
In the wake of an uncertain climate, many are “panic buying” at grocery stores, leaving shelves bare while others can’t seem to sell off stocks fast enough, pushing the economy towards a deep recession.
Impact on Consumers
Some states have issued shelter-in-place mandates while most have shut down restaurants, schools and nonessential businesses. Americans have been asked to practice social distancing as much as possible.
All of which means consumers aren’t able to spend their dollars at brick-and-mortar stores. And in such unprecedented, unpredictable times, consumers also are tightening their belts in anticipation of losing their jobs or riding out a bear market.
Impact on Businesses
Businesses are understandably concerned about delayed or interrupted supply chains and about the negative impact the virus has had on consumer behavior.
And many will have to lay off workers in an effort to stay afloat while economists are predicting historically high unemployment rates in the coming weeks and months.
So not surprisingly, many individuals and business owners have expressed anxiety around the looming April 15 tax filing date.
Will they be able to meet with their tax preparers to get their returns filed on time? And if so, will they have the resources to pay any taxes they owe?
Many tax filers breathed a big sigh of relief when U.S. Treasury Secretary Steven Mnuchin announced on March 20 that all taxpayers will have until the summer to file and pay taxes without fear of racking up interest and penalties.
Deferred Payments and Deadlines
At President Donald Trump’s direction, the tax filing deadline has been pushed from April 15 to July 15.
Although previously the administration had announced it would defer tax payments (including tax on self-employment income) for 90 days, they had not extended the filing deadline from April 15.
However, in the wake of recent pandemic-related developments, not only are tax payments being deferred for 90 days but so are tax filing deadlines.
According to the IRS website:
The 2019 income tax filing and payment deadlines for all taxpayers who file and pay their federal income taxes on April 15, 2020, are automatically extended until July 15, 2020. This relief applies to all individual returns, trusts and corporations. The relief is automatic; taxpayers do not need to file any additional forms or call the IRS to qualify.
Additionally, the Treasury stipulates that individuals who cannot file by the July 15, 2020, deadline are eligible to request an extension to submit their return by filing form 4868 through their tax professional or tax software or by using the Free File link on the IRS website. Businesses should use Form 7004. (However, barring any additional changes it’s important to note that penalties and interest will start to accrue on July 16, 2020, on any remaining unpaid balances.)
Also important to note: This tax relief does not apply to state tax payments or deposits or payments of any other type of federal tax. Filers will need to submit returns by April 15, 2020 within the 42 states that require it, plus the District of Columbia—although state tax filing and payment deadlines vary from state to state, so filers should check with their state tax agencies.
Finally, those taxpayers who expect a refund are being urged to file their returns as quickly as possible.
Ask the Experts
If you’re looking for experienced tax preparers, why not talk with a professional at Sunset Finance today? We’d love to hear from you!