Contributed by: Allison Bondi
Americans now have an extra 3 months to file their 2019 federal income taxes.
President Trump issued an Emergency Declaration on March 13, 2020 to provide relief from tax deadlines to Americans who have been impacted by the COVID-19 emergency.
The new deadline is July 15.
If you’re expecting a refund, consider filing sooner. However, for those with a large tax liability, the new deadline provides some extra time to develop a thoughtful strategy for paying the taxes due.
According to guidance from the IRS, individuals will be able to defer up to $1 million and corporations will be able to defer up to $10 million for 90 days without penalties and interest for taxes due. The $1 million limit applies both to single filers and to married couples filing joint returns.
Does this apply to state income tax payment deadlines?
No. The extension is for federal income tax, not state income tax. Consult your tax professional for more details about your state’s policies.
What do I need to do to elect the deferral?
Nothing. Any interest or penalty from the IRS from April 15 to July 15 will automatically be waived. Penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020.
Does this mean I can make 2019 IRA contributions until July 15?
Yes. Per IRS publication 590-A: “Contributions can be made to your traditional IRA for a year at any time during the year or by the due date for filing your return for that year, not including extensions.” The due date for filing the 2019 return is now July 15, 2020, so you have until that date to make 2019 IRA contributions.
Stay up to date with COVID-19-related changes. Visit irs.gov/coronavirus to explore related resources, and reach out to your tax professional and financial advisor with any questions you have about your specific tax situation and financial plan.
Allison Bondi is a Marketing Administrator at Center for Financial Planning, Inc.® She facilitates marketing initiatives and communications.
Raymond James and its advisors do not offer tax advice. You should discuss any tax matters with the appropriate professional. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.