While tax season officially began at the end of January, a lot has changed since then. The coronavirus, which is currently affecting countries all around the globe, has swept across the United States. It has impacted individuals, businesses large and small, and the economy as a whole.
Residents of the US are being encouraged to distance themselves from others, and increasingly more states are instituting “Safer at Home” orders. People are being told to only go out for groceries and medical care only when it’s absolutely necessary. Business owners are losing a significant amount of money. Those considered “non-essential” are being recommended to either alter how they do business or close their doors for the time being. Some businesses have no choice but to cease operations until things begin to return to normal.
With the due date for filing federal tax returns quickly approaching and no end in sight for the devastation caused by the coronavirus, the Internal Revenue Service has announced that tax filing due dates will be extended.
The New Federal Income Tax Deadline
In March, the IRS announced that the federal income tax filing and payment deadline, which normally falls on April 15th, is being extended to July 15th, giving taxpayers an additional three months for tax return preparation and payment. The new deadline applies to all taxpayers, including individuals, businesses, trusts and estates, and self-employed individuals.
Even with this extension, the IRS is encouraging people to still file their federal income taxes as soon as possible. The agency states that the best way to file is electronically, with direct deposit the fastest way to receive your refund. For now, most refunds are still being issued within 21 days.
You don’t have to submit any additional forms to qualify for the extended federal income tax deadline. The extension is automatic and available to all taxpayers if needed. However, if you need longer than July 15th, you still have to file a request for an extension to October 15th.
What If I Owe Taxes?
Normally, taxpayers who owe taxes after filing have until April 15th to submit their payment. Any balance not paid by the deadline is subject to penalties and interest. As the coronavirus continues to impact individuals and businesses throughout the United States, the IRS has moved the deadline to pay taxes owed to July 15th as well. Even if you file now and find that you owe, you have until July 15th to make your payment without accruing any penalties or interest.
Potential Tax Benefits for Small Businesses
In addition to extending the deadline for tax return preparation and payment, the IRS has also announced plans that could help small businesses affected by the coronavirus. Under the Families First Coronavirus Response Act, small to medium-sized businesses can take advantage of two refundable payroll tax credits that immediately reimburse them for the cost of providing their employees with coronavirus-related sick leave. The goal of the act is to keep employees on the payroll rather than forcing them to choose between their job and their health or the health of their families.
Under the act, employees of businesses with fewer than 500 workers can receive up to two weeks (80 hours) of paid time off at their full pay. The act provides a paid sick leave credit as well as a child care leave credit, which can provide eligible employers with refundable credits for employees who are unable to work due to self-quarantine, illness, or the need to care for their children. Small businesses with fewer than 50 employees are eligible for an exemption from leave requirements due to school or childcare closings if the requirements will affect the business’s ability to keep running.
The coronavirus has affected the US, and countries all around the world, in ways that have never been seen before. In response, the IRS has pushed back the federal income tax filing deadline as well as the due date for paying taxes owed. Even with the extension, it’s still recommended to file as soon as possible. If you need assistance with your tax planning and preparation, I can help. Contact me at the Law Offices of Lawrence Israeloff, PLLC today.