Coronavirus (COVID-19): How It Affects Taxes
Everyone is affected by the Coronavirus (COVID-19) pandemic in this very uncertain time. From social distancing to quarantined living, our daily lives have changed for the foreseeable future. Tax season is also affected with filing and payment deadlines being delayed federally and in many states. Here’s a look at the changes for 2019 tax season.
On March 20, the Secretary of Treasury announced the federal tax-filing deadline has been extended to July 15, 2020. This means that if you owe money to the Internal Revenue Service (IRS), payment is not due until July 15.
If you are a taxpayer who will receive a refund, you are encouraged to file sooner rather than later to receive that refund. This is especially important during uncertain times when having money in your account could be critical.
If you do owe federal taxes, the IRS is granting allowing individuals to defer payment, interest free and penalty free, until July 15. Individuals and self-employed taxpayers can defer up to $1 million for tax year 2019 federal tax payments. This deferment will also apply to tax year 2020 estimated tax payments previously due on April 15, 2020. Corporations can defer up to $10 million in federal payments.
Each state is determining how it will handle tax deadlines and payments given the Coronavirus. Many are following the federal extension to July 15, but it’s important to check your state’s tax board t make sure.
The California Franchise Tax Board has postponed the state tax deadline to July 15 as well, for both filing and payments, for both individuals and business owners. This includes 2019 tax returns and payments, 2020 first and second quarter estimated payments, 2020 LLC taxes and fees, and 2020 non-wage withholding payments.
If you’re not sure what these new deadlines mean for you as a taxpayer or business owner, consult an experienced tax professional for help. We are living in unprecedented times. It’s best to seek help from a tax expert than try to navigate federal and state taxes alone.
Allison Soares is a partner and tax attorney at Vanst Law. It doesn’t matter the issue: audits, collections, appeals, international disclosures, grumpy people— Allison enjoys fixing tax problems. In addition to her legal work, she has worked in accounting and utilizes that knowledge to her advantage while handling cases involving the IRS and state tax problems.