Tax filing extension: Should I file now anyway?
U.S. taxpayers will have extra time this year to file their taxes, with the government pushing the filing deadline from April 15 to July 15, 2020.
The move comes as a response to the COVID-19 pandemic sweeping across the United States and is designed to provide relief to U.S. taxpayers struggling with the economic fallout of the virus.
Steven Mnuchin, Secretary of the U.S. Treasury Department, announced the tax extension on March 20.
What does the tax extension deadline mean for you?
This announcement represents a significant change from earlier notices from the Internal Revenue Service. The IRS on March 18 announced that taxpayers wouldn't have to pay any federal tax they owed until July 15. But the agency said that the filing deadline would remain April 15, meaning that taxpayers would still have to drop their federal income tax returns in the mail by midnight on that day.
That changed — as news has tended to do during the COVID-19 pandemic — quickly, with legislators urging the government to not only move the tax-filing deadline, but also to defer the tax-payment deadline to the middle of July 2020.
What about state income taxes?
The federal government's announcement only holds for federal income taxes. As the IRS said on its website, individual states are not required to change their tax filing deadline under the new order.
This doesn't mean that individual states won't make this move, too. The IRS recommended that taxpayers check with their local state governments before skipping the April 15 tax deadline for their states. According to the IRS, 42 states and the District of Columbia require taxpayers to pay state income taxes.
What about estimated tax payments?
Taxpayers who work as contractors, are self-employed, or work on a freelance basis must make quarterly tax payments each year, making estimated payments in the middle of April, June, September, and January. The next round of quarterly tax payments, then, would be due on April 15, 2020. Will taxpayers who are required to make these payments need to pay their estimated tax payments on that date?
That's still unclear. The IRS, which usually publishes press releases announcing major changes such as this, had not released all the information on the tax extension deadline, including any information about estimated taxes.
It might be prudent, then, to prepare to make these payments unless the IRS announces that they, too, will be delayed until July 15.
Should you file anyway?
The government's move doesn't mean that you can't file your taxes before July 15, 2020. In fact, you can file them any time before that date if you'd like.
When does it make sense to file by April 15 as in any other year? If you are due a refund. Treasury Secretary Mnuchin, in fact, has repeatedly urged U.S. taxpayers who are owed a refund to file when they can. That way, they can gain access to their money faster.
Remember, if you don't file your federal income taxes until July 15, 2020, you won't get any refund you are due until after that date. If an infusion of cash would be helpful, it makes sense to send in those federal income taxes by April 15, even with the tax filing extension.
If you owe money on your federal income taxes, it might make sense to wait to file until the new July 15 deadline. The tax filing extension can be especially helpful if you are struggling to pay your other bills as a result of the coronavirus pandemic. The tax extension could provide at least some financial relief.
Worth noting: Filing your taxes early could also help to lessen the chance of becoming a victim of tax-related identity theft. That’s when someone files a tax return in your name to claim a refund. After you file your tax return, the IRS will block any further attempts to file a return in your name.
Editorial note: Our articles provide educational information for you. Norton LifeLock offerings may not cover or protect against every type of crime, fraud, or threat we write about. Our goal is to increase awareness about cyber safety. Please review complete Terms during enrollment or setup. Remember that no one can prevent all identity theft or cybercrime, and that LifeLock does not monitor all transactions at all businesses.