They say the only two things certain in life are death and taxes. Amid the coronavirus pandemic, taxes are still a certainty—but with a slight delay.
On March 20, 2020, the Secretary of the Treasury announced a major change to the tax deadlines. Taxpayers can now file and submit payments for their 2019 taxes without incurring penalties or interest until July 15, 2020.
We know all these tax changes can be confusing, especially when you’re trying to decipher the IRS’ announcements. It’s like going on a bad date. You know there’s something there, but they ain’t talking.
So, to help you wade through these confusing tax waters, we’ve answered your most common questions about the new tax deadlines.
How do taxes usually work?
OK, you might not really be wondering how taxes usually work. Still, to understand the 2020 tax changes, it’s helpful to have a refresher.
Tax returns are normally due by April 15. So are payments for any taxes that are owed (this deadline is sometimes bumped by a day or two if April 15 falls on a weekend or a holiday). You can file an extension until October 15, but this doesn’t extend the payment deadline. Normally, if you owe money, you start incurring interest after April 15, even if you have an extension.
How are taxes changing in 2020?
The big change is that you now have until July 15, 2020, to file your 2019 tax returns and make your tax payment without any interest or penalties.
If you can’t file your taxes by July 15, you’ll still need to file an extension. If you file an extension, your tax return is due by October 15.
If you owe money, you’ll start incurring interest on the amount you owe after July 15, 2020.
Do I still have to pay my estimated taxes?
Yes, but the deadline has been extended for the first-quarter estimated tax payment. This payment is typically due by April 15. Now, first-quarter estimated tax payments are due July 15.
As it stands now, second-quarter estimated tax payments, ordinarily due by June 15, are still due on that date.
Most states are linking their policies to what the IRS does. So it is safe to assume, for now, that states will adopt policies to follow whatever the IRS and Treasury do.
But, it’s still important to check the tax-filing deadline with your state’s income tax agency. Here’s a list of each state’s income tax agency and how to contact them.
If I’m expecting a tax refund, will this impact my refund?
Nope! In fact, the IRS is urging people who think they’ll receive a tax refund to file their taxes as quickly as possible, so they receive their refund promptly. Currently, there’s no delay in federal refunds.
Should I wait to file my taxes—or file them right now?
While it may be tempting to push back your taxes, we recommend you still file your taxes as early as possible.
Without preparing your return, you won’t know how much to pay. This is why we suggest you focus on completing your return as early as possible, so you understand how much tax you owe and can make plans to pay it.
We recommend you file your tax return by the end of May.
We think this is a good balance between making sure you aren’t worried about your tax liability all spring and having the time to get the necessary work done to file your taxes without extra stress.
Ultimately, we hope this delay gives you a bit of relief in these uncertain times. Who knows—maybe you’ll even be willing to go on that second date… but this time, you’ll spring for a bottle of wine.
Andi Smiles, small business financial consultant and coach, teaches rad business owners to take control of their finances so they can step into their personal power.
She’s helped hundreds of self-employed folx organize and understand their business finances, while also uncovering their emotional relationship with money. Andi’s core belief is that when business owners are engaged with their finances, their personal awareness around money deepens, creating more sustainable and authentic businesses. She loves helping business owners connect with and feel good about their finances- no matter how many dollars are in their bank account.