2019 Tax Deadlines Extended
The US Treasury and the IRS recently extended the 2019 federal tax filing deadline 90 days, moving the deadline to file and pay taxes from April 15, 2020 to July 15, 2020. This extension was initially announced in a press conference and confirmed via tweet, but subsequently, further detail has been added. Since there are a few changes from the original announcement, we wanted to outline where we stand now and overview some of the impacts of the extension.
What returns does the extension apply to?
The extension applies to any individual, trust, estate, corporation or unincorporated business entity that is filing an income tax return with a due date of April 15, 2020. This includes returns that have an original due date of April 15, 2020 as well as any returns on extension with a due date of April 15, 2020. It does not matter whether the return is on a calendar year or a fiscal year, if the return was due to be filed by April 15, 2020, that filing and paying deadline is now July 15, 2020. Payment of income tax, including self-employment taxes, is deferred without interest and penalties until July 15, 2020. This week the IRS has augmented the original notice to also extend the time to file a gift tax return and pay gift tax until July 15, 2020.
The forms included in the extension are:
- 1040, 1040-SR, 1040-NR, 1040-NR-EZ, 1040-PR, 1040-SS
- 1041, 1041-N, 1041-QFT
- 1120, 1120-C, 1120-F, 1120-FSC, 1120-H, 1120-L, 1120-ND, 1120-PC, 1120-POL, 1120- REIT, 1120-RIC, 1120-SF
- 8960, 8991
What returns does the extension not apply?
As described above, the extension only applies to income tax returns due April 15, 2020. That means this extension does not apply to income tax returns with dates different than April 15, 2020, such as fiduciary income tax returns on a fiscal year, corporate returns with due dates of March 16, 2020, or charitable foundation returns due May 15, 2020. The extension also does not apply to estate tax returns. Payroll and excise taxes are also due on a regular schedule.
The forms not included (unless income tax return are due on April 15, 2020) in the extension are:
- 990, 990-T, 990-PF
- 1065, 1065-B, 1120-S, 1066
Additional extensions to file are still available:
If July 15, 2020 is not enough time to collect information and prepare your income tax returns, you are still able to file an extension as you normally would using Form 4868 for individuals or Form 7004 for businesses/trusts/estates.
Two important points:
- If you file a timely extension, payment is still due on July 15, 2020. After July 15, 2020, interest and penalties will begin to accrue; and
- If you file a timely extension, your new tax due date is October 15, 2020.
The extension to July 15, 2020 also applies to the first quarter 2020 estimated tax payments, which is generally due April 15. No other estimated tax payment deadlines have been extended. This leads to a unique circumstance where the first quarter payment is due July 15, 2020 and the second quarter payment is due June 15, 2020. This is confusing, but the impact will only be noticeable to someone who has underpaid their annual estimated income tax due. Make sure you and your tax preparer are paying the “Safe Harbor” amount of estimated income tax due for 2020 to avoid any future under payment confusion.
2019 Tax Deductions Still Available:
One of the ancillary benefits of moving the income tax filing deadline to July 15, 2020, is two potential income tax deductions have also been extended:
- You now have until July 15, 2020 to make a 2019 contribution to your IRA.
If you are making a contribution designated for 2019 after April 15, 2020, make sure the financial institution is aware and categorizes the contribution correctly. Most financial institutions have automatic coding for receipt of contributions made after April 15 to be reflected in the current year.
- Contributions to Health Savings Accounts and Archer Medical Savings Account for 2019 may also be made until July 15, 2020.
Massachusetts Filing Deadline Extended to July 15, 2020:
The federal extension order applied only to federal income tax returns. Each state has to decide on its own whether it will extend the state filing deadline.
On March 27th, Governor Baker of Massachusetts announced, “Massachusetts will move the state personal income tax filing and payment deadline to July 15, consistent with the federal government, in order to provide flexibility to filers during this crisis.” There will likely be more information released that will give greater detail, but it seems clear that the intention is for the extension to be consistent with the IRS extension. If there is any further detail that differs from the IRS extension, we will keep you updated.
- You do not have to be directly impacted by Covid-19 for your tax return deadline to be extended until July 15, 2020. It applies to any return with a tax filing deadline of April 15, 2020.
- No additional forms are required to benefit from the extension. You just have to file your return as normal by July 15, 2020.
- If you have already filed, but not yet paid, you can wait until July 15, 2020 to pay any tax due without interest and penalties. If you have scheduled payment for automatic withdrawal as of April 15, 2020, you will need to manually change the payment date, it will not be automatically changed to July 15, 2020.
- If you are due a refund and your return is done, you can and should file your return to get the refund. It is likely that there will be some delay in delivering the refunds, but there is no prohibition from filing tax returns prior to July 15, 2020.