July 15 tax filing and payment deadline Q&A
Saturday, March 21, 2020
We're in what during normal times would be the annual tax season's big push to the end (or an extension). But these are not normal times. Instead, it feels more and more like we're living in a tax version of Bill Murray's classic "Groundhog Day."
That's because for the second time in three days the Treasury Department and Internal Revenue Service have moved the deadlines for filing and paying taxes.
Friday, March 20, morning Treasury Secretary Steve Mnuchin decided that an earlier decision that split the usual April 15 deadline for tax filing and paying should be changed. So he announced, via Tweet, that those two tax tasks would be reunited, pushing the due date for paying and now filing returns to July 15.
Later that day, the IRS tried to clear things up (again) by issuing guidance in Notice 2020-18 about 2020's new July 15 Tax Day. Naturally, that makes July 15 this week's By the Numbers honoree.
And since my tax deadlines questions and answers post the first time the IRS did this (way back on March 18) was so popular, here's a new Q&A for the latest and we hope last Tax Day changes.
When do I have to send my Form 1040 to the IRS?
Wednesday, July 15 is the new deadline to e-file (by midnight your time) or snail mail (so that the envelope has a 7/15 postmark) your 2019 tax year return. Treasury and the IRS shifted it from April 15 to July 15 to align it with their earlier move of the just-tax-payment deadline. As many (many, many, many) folks noted, this division had the potential to be more confusing that the actual filing itself, so kudos to Treasury and the IRS for granting us 90 extras days to finish our tax forms and pay what we owe.
When do I have to pay any tax I owe?
Again, this due date remains July 15. That gives you three more months to come up with the money or make payment arrangements with the IRS.
Does the July 15 deadline apply to all taxpayers?
Yes. The IRS reiterated in its latest notice that the July 15 tax filing and payment deferment applies to all taxpayers. This includes individuals, trusts and estates, corporations and other non-corporate tax filers, as well as entrepreneurs who pay self-employment tax.
Does it matter how big my tax bill is?
This is a change from the earlier iteration of the new 90-days-later Tax Day. In the first shifting of tax deadlines, the option to pay taxes as late as July 15 applied only to certain individual taxpayers and businesses that met caps on the amount of tax owed. Those tax bill limits are gone. All taxpayers now can postpone paying their due federal income tax until July 15, regardless of the amount owed.
Will the IRS slap me with extra charges for using this July 15 deadline?
No. Taxpayers can make their 2019 federal income tax payments as late as July 15 and not face penalties or interest. Note, however, that if you don't pay any tax due by the July deadline, penalties, interest or any other additional fees for failure to file or pay will start adding up on July 16.
What if I still can't make the new, later July 15 deadline?
The later Tax Day date is automatic, so there's no need to mess with filing an extension request by April 15. If, however, mid-summer arrives and you still can't complete your 1040, not to worry. The existing Oct. 15 extended filing deadline is still around.
In an news release issued today, March 21, the IRS notes that individual taxpayers who need additional time to file beyond the July 15 deadline can request a filing extension by submitting Form 4868 and automatically get even more time to file. Businesses that need additional time beyond July 15 can by that date send the IRS Form 7004.
You can file Form 4868 electronically or download the paper form and snail mail it. That form, however, might need to be tweaked, too, since it usually is connected to paying any tax you owe. There's also some thought that since this usually is six-month filing extension, the final deadline might be pushed from Oct. 15 to Jan. 15, 2021. (It's always something with taxes.)
Remember, though, that the extra time afford by filing Forms 4868 or 7004 is for finishing up your tax forms only. You still have to pay any tax due by the deadline, which this year is July 15.
What about other tax deadlines?
The annual April tax deadline normally applies to more than just your prior year's tax return and any amounts owed. It's also the due date for some other taxes and tax-related moves. This includes the first estimated tax payment for 2020 that's due on April 15, as well as the ability to put money into tax-favored health savings accounts and IRAs.
Those other tax filings are not covered by the new July 15 deadlines. According to Notice 2020-18 (I added the bold type):
"The relief provided in this section III is available solely with respect to Federal income tax payments (including payments of tax on self-employment income) and Federal income tax returns due on April 15, 2020, in respect of an Affected Taxpayer’s 2019 taxable year, and Federal estimated income tax payments (including payments of tax on self-employment income) due on April 15, 2020, for an Affected Taxpayer’s 2020 taxable year."
This is the same stance as the IRS took in the first separate filing/payment deadline change. It's a curious position since two estimated tax deadlines fall within this April-to-July time period, but only one, the 1040-ES due on April 15, is given the added July 15 grace period.
Again, why IRS? Why are you making us pay the second quarter estimated tax due on June 15 BEFORE we have to pay our first estimated tax for 2020 by July 15? What's another month wait at this point? You need to take a look at the proposal in the Senate's coronavirus relief bill.
The Upper Chamber's Coronavirus Aid, Relief, and Economic Security Act, or as it's being called the CARES bill, makes changes to various tax filing and payment due dates (discussed in a Twitter exchange about the bill).
As for estimated tax deadlines, the CARES Act would delay the April, June and September estimated tax payment deadlines (shown in red in the table below) for the 2020 tax year until Oct. 15.
For income received in
Jan. 1 through March 31
April 1 through May 31
June 1 through Aug. 31
Jan. 15 of the next year
Sept. 1 through Dec. 31
*If the 15th is on weekend or federal holiday, the estimated payment is due the next business day
CARES says "all such [estimated tax] installments shall be treated as one installment due on such date."
As for the contributions to IRAs and HSAs that can be made for the prior tax year as late as April 15, it appears that the April deadline is still in force. Notice 2020-18 expressly states:
"No extension is provided in this notice for the payment or deposit of any other type of Federal tax, or for the filing of any Federal information return."
However, some tax pros think this latest extension notice implies that these deadlines also will be extended. Some cite Tax Code Section 301.7508A-1 - Postponement of certain tax-related deadlines by reasons of a federally declared disaster or terroristic or military action.
UPDATE, March 25: Hurray for folks with IRAs and HSAs! You now also get until July 15 to make contributions to these tax-favored accounts. The IRS clarified this in a new Q&A it created to deal with the extended deadlines and Notice 2018-18. The tax agency says the existing law that says contributions can be made to IRAs and HSAs (as well as Archer Medical Savings Accounts, or MSAs, a specific medical savings account created before HSAs and are only available to self-employed individuals or people who are employed by a company with 50 or fewer employees) for a particular year as late as the due date for the filing of that year's return. Because the due date for 2019 tax return filing has now been postponed to July 15, the deadline for making contributions to these accounts for 2019 also is also extended to July 15.
Personally, I'd like the IRS to give us some more explicit clarification here. C'mon man, don't make us argue among ourselves and have to second guess what y'all at 1111 Constitution Avenue, N.W. are thinking!
Will the same payment delay apply to my state taxes?
Most of the 43 states and District of Columbia where some sort of income tax is collected tend to follow the IRS when it comes to things like filing deadlines. When that's been changed in the past, these state tax departments tended to follow.
But payments are different. Many states were facing budget difficulties before they, too, saw their economies whacked by the coronavirus outbreak. So they might not be as willing or able to forgo revenue collection even for a relatively brief period.
Gail Cole has a state tax action segment in her new coronavirus tax relief roundup at the Avalara blog. Tripp Baltz and Michael J. Bologna, staff correspondents with BloombergTax, also note that Some States Auto-Match IRS Tax Delay; Others in Flux. And the AICPA has a handy table of State Tax Filing Guidance for Coronavirus Pandemic.
My best advice here is for you to be pro-active. Pay attention to your local news, which should alert you to local and state tax changes, and periodically check in with your state tax officials. You can find links to them in the ol' blog's state tax directory.
What does all this messing with tax calendars really mean?
For taxpayers, it's generally a good thing. As we deal with the COVID-19 disruptions in our personal lives, we at least don't have the added stress of an impending tax deadline. And the extra time gives those who owe more time to come up with the cash due Uncle Sam.
Tax professionals also are breathing sighs of relief — from their appropriately social/physical distances of at least 6 feet, of course. They don't have to deal with a lot of frantic clients all pressuring them seemingly simultaneously to get their returns done. They should be able to space out the workflow a bit to take some pressure off themselves and their staff.
It should help the IRS, too. The delay could help the agency cope with the added stressor that the pandemic has created for the agency, which in addition to dealing with taxpayers has to think about its thousands of worried and possible ill employees across the country. Now they get more time and don't have to worry about keeping track of two separate Tax Day deadlines.
Logistically, the IRS would like all of us who can file before July to do so. That would help the agency spread the work out more, rather than having a big crush of returns in mid-summer.
"Even with the filing deadline extended, we urge taxpayers who are owed refunds to file as soon as possible and file electronically," said IRS Commissioner Chuck Rettig. "Although we are curtailing some operations during this period, the IRS is continuing with mission-critical operations to support the nation, and that includes accepting tax returns and sending refunds."
Rettig also assures us that refunds are going out as soon as they are processed. And he's asking that we cut his agency and employees some slack in what he notes is a challenging and "very rapidly changing environment."
"As a federal agency vital to the overall operations of our country, we ask for your personal support, your understanding – and your patience," said Rettig. He also encouraged folks to check out the agency's special coronavirus page at IRS.gov where it posts updates on tax matters affected by the pandemic.
I'm inclined to give the IRS some leeway here. It's crazy and scary for us all. I appreciate everyone who's doing the best jobs they can under the circumstances.
Finally, take care of yourselves and families first, especially now that you have some added time to take care of your taxes.
|Coronavirus Caveat & More Information
In 2020, we're all dealing with extraordinary circumstances,
both in our daily lives and when it comes to our taxes.
The COVID-19 pandemic and efforts to reduce its transmission
and protect ourselves and our families means that,
for the most part, we're focusing on just getting through these trying days.
But life as we knew it before the coronavirus will return,
along with our mundane tax matters.
Here's hoping that happens soon!
In the meantime, you can find more on the virus and its effects on our taxes
by clicking Coronavirus (COVID-19) and Taxes.
You also might find these items of interest:
- Businesses get tax relief in House-passed coronavirus bill
- Stop smoking to reduce health risks & possibly your taxes
- Obamacare tax forms in the time of coronavirus
The IRS website Q&A is now saying that IRAs and HSAs are both extended to July 15th.
Posted by: Hal Rosen | Wednesday, March 25, 2020 at 07:26 AM
FYI, the IRS has provided specific guidance regarding the impact of the postponement of the filing deadline on the deadline for making IRA contributions. Under IRS's Filing and Payment Deadlines Questions and Answers, Q & A 17 states "Contributions can be made to your IRA, for a particular year, at any time during the year or by the due date for filing your return for that year. Because the due date for filing Federal income tax returns has been postponed to July 15, the deadline for making contributions to your IRA for 2019 is also extended to July 15, 2020."
Posted by: Pablo J | Wednesday, March 25, 2020 at 03:16 AM
Thanks, Pablo, for catching my Form 7007 typo. The link does go to 7004, but my fingers (and brain) obviously misfired! Corrected. Also thanks for the added extension info. Kay
Posted by: Kay Bell | Sunday, March 22, 2020 at 04:17 PM
Your references to Form 7007 need to be corrected. The IRS form for corporate extensions is Form 7004.
Also there's another April 15 deadline no one seems to be taking note of: federal gift tax returns are filed on Form 709 and those returns need to be extended for taxpayers who already filed their F1040's. Form 709 extensions are obtained using Form 8892 which apparently cannot be e-filed.
Posted by: Pablo J | Sunday, March 22, 2020 at 04:20 AM