The Treasury Department and the Internal Revenue Service (IRS) announced special Federal income tax return filing and payment relief in response to the ongoing Coronavirus Disease 2019 (COVID-19) emergency. Here are some key highlights.
ELIGIBILITY FOR RELIEF
Any person with a federal income tax return or payment due on April 15, 2020, is eligible for relief under the Notice. “Person” includes an individual, a trust, an estate, a corporation, or any type of unincorporated business entity. The payment due refers to both 2019 Federal income tax payments (including payments of tax on self-employment income) and 2020 estimated Federal income tax payments (including payments of tax on self-employment income), regardless of the amount owed. The return or payment must be due on April 15, 2020 – under this relief provision, no extension is provided for any other type of Federal tax, or the filing of any Federal information return, or payments due on any other date.
However, on estate and gift taxes, normal filing and payment due dates continue to apply. The relief does NOT apply to estate and gift taxes.
FILING & PAYMENT
If you have not yet filed your 2019 income tax return that would have been due on April 15 and intend to file it by July 15 – go ahead and file and pay any tax due on your return by July 15, You don’t need to file any additional forms or call the IRS to qualify for this automatic Federal tax filing and payment relief. If you expect a refund, you are encouraged to file your return ASAP so you can receive your refund. The quickest way to get your refund is to file electronically and request your refund as a direct deposit.
NEED MORE TIME TO FILE YOUR RETURN?
If you are unable to file your 2019 income tax return that would have been due on April 15, 2020 by July 15, 2020 – you can request an automatic extension to file your Federal income tax return. The easiest and fastest way to request a filing extension is to electronically file Form 4868 through your tax professional, tax software or using the Free File link on IRS.gov. Businesses, including trusts, must file Form 7004.
You must request the automatic extension by July 15, 2020. If you properly estimate your 2019 tax liability using the information available to you then filing an extension by July 15, 2020 gives you an additional three months (until October 15, 2020) to file your Federal income tax. To avoid interest and penalties when filing your tax return after July 15, 2020, pay the tax you estimate as due with your extension request. In fact, if the IRS believes that your estimate was not reasonable, it may void your extension.
ESTIMATED TAX PAYMENTS
The Notice postpones the deadline for first quarter 2020 estimated income tax payments due on April 15, 2020. Note that second quarter 2020 estimated income tax payments are still due on June 15, 2020. First quarter 2020 estimated tax payments are postponed from April 15 to July 15, 2020.
This relief does provide more time to contribute money to your IRA for 2019. Because the due dates for filing Federal income tax returns has been postponed to July 15, the deadline for making contributions to your IRA for 2019 is also extended to July 15, 2020.
FOR MORE INFORMATION
For additional information about IRS emergency tax relief and Notice 2020-18, visithttps://www.irs.gov/newsroom/filing-and-payment-deadlines-questions-and-answers
Isdaner & Company will continue to keep you updated as the IRS provides guidance on COVID-19 matters.