IRS Announces 90-Day Extension for 2019 Tax Payments

Taxpayers have until July 15, 2020, to file and pay 2019 taxes

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On Wednesday, March 18, 2020, the Internal Revenue Service (IRS) and the U.S. Department of the Treasury announced that individual and non-corporate taxpayers who owe less than $1 million in taxes can delay paying their 2019 tax bill and their first-quarter estimated taxes for up to 90 days, until July 15, 2020. 

In a press release, Treasury Secretary Steven Mnuchin explained the purpose of this tax relief:

“This deferment allows those who owe a payment to the IRS to defer the payment until July 15 without interest or penalties. Treasury and IRS are ensuring that hard-working Americans and businesses have additional liquidity for the next several months.” 

On Friday, March 20, 2020, Mnuchin announced via Twitter that all taxpayers and businesses will also have this same 90-day extension for filing their tax returns. On Saturday, March 21, 2020, the IRS confirmed this on its website, stating that Tax Day 2020, the deadline to file your 2019 tax returns, is now July 15, 2020, as well.

Who Can Postpone Paying Income Taxes? 

You can postpone paying any taxes you owe on your federal income tax return (Form 1040 and Form 1040-SR for seniors) up to $1 million, including your small business and self-employment taxes you paid through personal tax returns. Additionally, you can postpone paying your first-quarter estimated taxes, normally due April 15, to July 15, 2020.

The total amount you can postpone (up to $1 million) is the same for individuals and those filing a joint return. 

Anyone with a federal income tax payment due April 15, 2020, is considered affected by the COVID-19 virus crisis for purposes of this tax relief. You don’t need to file additional forms or call the IRS to qualify for this relief. 

Do I Still Have to File My Return by April 15?

On Saturday, March 21, 2020, the IRS confirmed the filing extension announced by Mnuchin on Friday, March 20, 2020. All taxpayers now have until July 15, 2020, to file their tax returns and make any federal tax payments that are due. You do not need to file any additional forms or an extension to delay filing your return or paying your tax payments.

If individuals or businesses need more time, they can file for an extension. To request an extension, businesses must file Form 7004, and individuals must file Form 4868.

Here's how you can file an extension electronically without making a payment for your 2019 taxes:

How Will This New Due Date Affect Small Business Owners? 

Many small business owners pay their business taxes through their personal tax returns (Form 1040 or 1040-SR), which are normally due April 15. Small businesses included in this tax relief measure are sole proprietors and one-owner businesses that file Schedule C, partners in partnerships, LLC members, and S-corporation shareholders filing Schedule K-1 for their share of business earnings.

How Will This Affect Corporations? 

Corporations (those who don’t file a consolidated return) may also delay their federal income tax payments of up to $10 million to July 15, 2020. Corporate income taxes are due on different dates, depending on their fiscal (financial) year end. Corporations with a December 31 year end, normally have their corporate taxes due on April 15. That deadline will now be July 15, 2020.

While the postponement also applies to estimated tax payments by corporations, it’s not yet clear how corporations with different fiscal year ends will be affected by this relief measure. 

What About Corporation and Payroll Tax Report Deadlines?

The 2019 income tax returns for partnerships and S-corporations were due March 16, 2020. This postponement doesn’t affect them because payments are made by individual owners, not the businesses. 

The postponement of taxes doesn’t include payment, deposit, or filing of any other type of federal tax or filing of information returns, including payroll tax reports and payments. 

Interest and Penalties 

If you pay the full amount of tax due by July 15, 2020, you won’t have to pay interest or penalties. The interest and penalties will begin to accrue after that deadline, on July 16.   

Will I Still Need to Make Quarterly Estimated Tax Payments? 

You can postpone making your first quarterly estimated tax payment, usually due by April 15, to July 15, 2020. There’s no word yet on how this postponement will affect other quarterly estimated tax due dates (the second quarterly payment is typically due on or around June 15).

Will the Extension Due Date Change?

Normally, the filing extension is six months from the April 15 due date—October 15. This deadline will remain the same for now. Corporations whose years end on December 31 can extend the due date to the regular extension deadline of October 15. 

What About My State Tax Payments? 

States are in the process of deciding how the federal tax payment postponement will affect their income tax deadlines. The American Institute of CPAs (AICPA) has a database with information on state tax delays that is being updated often, but you can also check with your state tax agency for information.

The Bottom Line

Individuals and businesses now have until July 15, 2020, to file their 2019 tax returns, pay first quarterly estimated taxes, and pay any 2019 federal taxes that they owe up to $1 million ($10 million for corporations). Consider working with an accountant or tax professional in order to best understand these changes taking place, and consult the IRS website for more information.

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