The coronavirus pandemic is affecting every aspect of life in the US, and taxes are no exception. The federal government, along with a number of states, has announced new deadlines around taxes in light of the crisis. Here’s what you need to know.
On March 21, the Treasury Dept and the IRS announced that, in consideration of the coronavirus, the deadline to file taxes has been pushed back from April 15 to July 15, 2020. The IRS is also now allowing deferred tax payments until July 15, 2020, regardless of the amount owed. Taxpayers who choose to defer payment to the new deadline do not have to pay penalties or interest.
What does this mean for you? You now have until the new July deadline to file and pay your taxes. The extension is automatically granted to all American taxpayers, so you don’t need to take any action to qualify. If you expect to need more time past July 15 to file, the IRS states that you can still apply for an extension as in normal tax years. Note that even if you get an additional filing extension, you’ll still need to pay your estimated amount by the July 15 deadline.
If your business is experiencing temporary cash flow problems due to pandemic disruption, choosing to defer tax payment until July could help preserve capital. If you expect to receive a refund, however, the IRS commissioner suggests filing as soon as possible, so that you can get your money sooner. The IRS announcement stated that most refunds are still being issued within 21 days.
As states collect taxes individually, coronavirus-related changes vary state by state. As of our publishing time, 21 states have issued updated guidance for tax deadlines.
What does this mean for you? Since every state is different, you’ll need to research what changes, if any, have been announced for this year’s tax filing season, for each state you do business in. Some states are allowing significant delays in filing or payment, while others are offering more limited extensions.
The American Institute of CPAs (AICPA) is tracking state-by-state tax announcements on their website. This is a great resource to help understand if your state has made any changes to help businesses deal with coronavirus.
If you’re in doubt about your business taxes, the best thing to do is to consult a professional who can help you determine the right course of action. We at Pilot are always happy to help.