As “social distancing” becomes the new normal in many cities, foot traffic has dramatically decreased for restaurants, bars, hotels, movie theaters, and more. It seems that nearly all businesses and wage workers have been affected in some way.
The government is actively working on legislation to ease the financial burden for Americans. One of the measures that the White House recently announced is an extension on tax payment due dates and tax filing requirements.
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How Does the IRS Tax Payment and Filing Extension Work?
The IRS lifted the April 15th tax payment deadline for taxpayers owing $1 million or less and corporations owing $10 million or less, waiving interest and penalties until July 15th.
Americans can now file their income tax forms via mail or online by July 15th without penalty. They can also submit any payments due by that date. After that date, penalties and interests on the unpaid debt will begin to accrue. If you feel that you will experience hardship because of an IRS payment, contact an IRS tax advocate for free help in negotiating a more affordable payment or even suspending payment.
Treasury Secretary Steve Mnuchin estimates that the COVID-19 tax extension will generate an extra $300 billion of liquidity to the American economy.
How Will the Tax Payment Extension Affect Small Businesses, Entrepreneurs, and Regular Wage Workers?
Virtually every American taxpayer qualifies for the COVID-19 tax extension.
If you’re self-employed, you’re aware that April 15th also doubles as the deadline for when your first quarterly tax payment is due. Now, the IRS has moved the due dates for tax return filing and tax payments due to the Coronavirus crisis.
How Do I Submit a Request for a Tax Filing Extension? April 15th or July 15th?
The IRS already allows taxpayers to apply for a 6-month filing extension by Tax Day, April 15th. The deadline was extended today to July 15th. If you can’t file your taxes by July 15th then you can request an official extension that may give you extra time to gather your documents, find an accountant, or prepare for an anticipated payment.
Even with the filing extension, you should file your taxes as soon as possible. Why? Because you may be owed a tax refund. And, if so, you’ll want to claim that refund as soon as possible–especially in these difficult economic times. If you have recently filed your personal income tax but not your business or self-employment taxes and need to check on your tax refund status, do it here.
Finally, it should be noted that the tax payment extension we’re discussing only applies to federal tax payments. If you live in a state that requires a state tax return, they’re free to set their own guidelines. Some states, however, have already announced extensions and it’s likely that other states will follow suit.
To follow coronavirus tax developments in each state, check out this continually-updated list from the American Institute of CPAs.