This information is current as of March 26, 2020. We will update it when new tax-related information is available.
In response to the economic disruption caused by the Coronavirus, the IRS is extending certain federal tax deadlines. Here is a brief summary.
You now have until July 15, 2020 to make 2019 tax-year contributions to your Traditional or Roth IRA.
Extended federal tax filing deadlines
The IRS has extended the deadline Americans need to file their 2019 federal tax returns and make tax payments from April 15 to July 15, 2020.
Who is eligible for this extension?
The extension applies to individuals, corporations and Trusts. Not only will you have more time to file your federal tax return but you can also delay paying any federal taxes you owe until that date.
What about refunds?
Obviously, if you’re expecting a refund there’s an advantage to filing your federal tax return earlier. But, given the current climate, it's possible that you may not receive your refund as quickly as you did in years past.
Does this same extension apply to state income tax returns?
State income tax filing deadlines do not need to be in sync with the July 15th federal extension. As of this writing, most states are not. So, you still may need to file your state income tax return and pay any money you owe by April 15, 2020 (or whatever April deadline your state uses). Some states may decide to extend their deadlines over the next few weeks, so keep current by checking in with your state’s Department of Revenue.
Can I still ask for an extension to file my state income tax return?
Depending on where you live, you may be able to file an extension to delay filing your state tax return. However, you may still have to pay a portion of any taxes you owe by April 15th, and interest may accrue on any unpaid amounts.
And since many state tax returns use the adjusted gross income figures from your federal tax return to determine your taxable state income, you still may want to complete your federal taxes first and then import the federal information into your state tax return. That way you meet your state's April filing deadline while potentially putting off filing your federal tax return (and paying what you owe) until July.
What about 2020 federal estimated taxes?
If you’re self-employed or own a business and typically pay quarterly federal estimated taxes, you will be able to delay the quarterly 2020 payment normally due on April 15 to July 15 without accruing late-payment penalties. However, if you wait until then you may want to increase that amount to also cover your June 15 quarterly payment as well, just to be safe.
Note that if you pay quarterly estimated state taxes you’ll still need to adhere to your state’s payment schedule.
Figuring out when filing makes sense
If you use an accountant or tax professional to prepare your taxes, it’s important to reach out to them soon to discuss your appropriate filing strategy. Like everyone else, they will be stretched during this trying time, so be patient if they’re aren't able to get back to you right away.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.
This article was authored by Dan Flanagan, a financial advisor and Partner located at Canby Financial Advisors, 161 Worcester Road, Framingham, MA 01701. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 508.598.1082 or [email protected].
©2020 Canby Financial Advisors