On March 21, 2020 IRS extended the 2019 tax season to July 15th due to the Covid-19 outbreak. This is an automatic extension; taxpayers do not need to file an extension. Unlike most extensions, it also extends the date of any balance due on 2019 tax without penalty or interest to July 15th. This extension applies to individuals, trusts, estates, corporations and other non-corporate tax filers.
Anyone who files estimated tax payments has also been granted this extension for 1st quarter estimated tax payments normally due on April 15th. The 2nd quarter estimated tax payment has been extended from June 15th to July 15th as well.
Many people are waiting to file because they have a balance for 2019. There is no reason to delay filing. You can file now and still delay paying until later.
Another common misconception is if you owe a balance for 2019 the Stimulus payment will be taken to pay down the balance due. This is not true. Stimulus payments are meant to help while people find themselves out-of-work during this chaotic time. IRS has stated that Stimulus payments will not be taken for balances due.
Refunds are still being processed and, in most cases, will be received within 21 days; file for your refund now. This gives you the ability to have your direct deposit information on file with IRS for the issuance of Stimulus payments. Without direct deposit information on file you will have to wait for a paper Stimulus check. This could take until mid-September depending on your income level.
People may have had significant life changes during 2019 like getting married, divorced or had a new dependent. By filing now, you can get your updated information on file with IRS to ensure that you receive the Stimulus payment you are entitled to.
If you were divorced in 2019 but have not filed your 2019 tax return, your ex may receive your Stimulus payment because you have not filed to let IRS know that you are now single. Think about how difficult it maybe to get your ex to give your share of the Married filling joint Stimulus payment if you are not on good terms. This can also create a problem when the ex goes to file their 2020 return, IRS is going to be looking for the overpayment back.
If you had a new dependent in 2019 you will want to file your 2019 return to claim the new dependent child and receive and extra $500 in Stimulus payment.
Another common reason people are waiting to file their 2019 tax return is to get a larger Stimulus payment. Maybe you know that in 2018, your dependent child was under the age of 17 and would qualify you for $500 of Stimulus money for that child. By filing 2019, IRS will know your child was over 17 and you would not receive the extra $500. IRS expect those funds back at some point. We know that IRS will require people to pay back any Stimulus money they received but were not entitled. What we do not know is if they charge penalty or interest on this money. We continue to wait for all the details to be ironed out regarding Stimulus payments.
Many people are finding themselves at home due to Covid-19. If you self-prepare your return, why not do it now while you have the time or before you forget? Again, if you owe money you have until July 15th to pay without penalty or interest. Why not file and then start saving to pay by the deadline? Again, just because you have a balance due does not mean it needs to be paid when the return is filed.
If you get to the July 15th deadline and still cannot pay the entire balance due, pay what you can toward the balance and then setup an installment agreement with IRS. The installment agreement allows you to pay the remaining balance due over time. IRS will charge interest on this balance due after July 15th and requires you to stay current on your taxes going forward.
If you are waiting to file your return until going out is safe again, there are many people who qualify for Free-File. You would not have to worry about going out to have your tax return completed. This allows you to prepare your return timely and off your To Do list! Individuals may be able to scan and email or even snail mail tax returns to a tax preparer to get it done while there is less of a time crunch to get it done.
