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2020 Tax Guide: IRS Changes Caused by Coronavirus

Find out what changes were imposed by the IRS in response to the coronavirus pandemic, including a later tax filing deadline and waived taxes and penalties.

Due to the recent COVID-19 pandemic, the 2020 tax-filing season is affected significantly.

The IRS is still accepting tax returns, tax payments and sending refunds, despite having to reduce operations.

Here’s what has changed and where deadlines currently stand. 

Tax Deadline Extended

According to the IRS, the new tax-filing deadline for 2019 tax returns is July 15, 2020.

The IRS also stated that taxes due can now be paid by the new deadline without incurring any taxes or penalties. This includes self-employment taxes.

The press release specifically states the following taxpayers are included:

  • Individuals
  • Trusts and estates
  • Corporations
  • Other non-corporate tax filers

You do not have to file an extension form to delay filing your tax return until the new July 15, 2020 deadline. 

If you or your business need additional time to file beyond the new July 15, 2020 deadline, you can still file an extension for time to file your tax return.

First Quarter Estimated Tax Payments Also Delayed

In addition to delaying the tax payment deadline for 2019 tax returns, the payment deadline for first-quarter estimated tax payments was also postponed with no interest or penalties. 

This deadline is usually the same as the federal income tax return deadline. This year, that was April 15, 2020. It is now delayed until July 15, 2020, as well. 

In another confusing move, the second-quarter estimated tax payment, due on June 15, 2020, has not yet been postponed.

What About State Income Tax Returns?

While the federal income tax deadline has been delayed, the federal government does not have the power to postpone state income tax return deadlines.

This isn’t a problem if you live in a state with no state income taxes. However, the vast majority of states have a state income tax.

Now:

While many states have delayed their tax filing deadlines following the IRS response to the coronavirus pandemic, you’ll need to verify what action your state has taken. 

If they have not extended your tax filing deadline, you’ll still need to file your state income tax return by the regular deadline.

In a normal year, most people file their federal income tax return and state income tax return at the same time. 

Tax preparation software options and professional tax preparers typically use information from your federal income tax return to complete your state income tax return. 

If your state tax deadline is before your federal tax deadline, you may still need to prepare your federal tax return first. 

You can wait to file your federal tax return, but at least you’d have the information so you can file your state income tax return.

The most reliable source to see if your state’s filing deadline has changed is your state’s tax agency.

Even so, the American Institute of Certified Public Accountants (AICPA) has compiled a resource of state tax filing guidance for the coronavirus pandemic.

Tips to Navigate This Tax Filing Season

While this tax season is far from ordinary, there are still some useful tips to help you get through it.

1. See if you’re getting a refund

You should prepare your tax return as soon as you can to see if you’re going to get a tax refund or if you’re going to owe money.

If you’re getting a refund, it makes sense to file as soon as possible.

That way, your refund can be processed sooner and get in your hands faster. 

In a time where people may need every dollar they can find, getting a tax refund faster could provide much-needed help.

2. Tax software makes home preparation easier

If you usually file your tax return at home by using tax preparation software, this shouldn’t be a problem. Prepare your tax return now. You don’t have to file it right away.

If you find you’re getting a refund, filing your tax return as soon as possible makes sure you get your tax refund faster. 

Those that owe money may decide to wait until the new deadline to file and pay. Make sure to set a reminder so you don’t forget to file and pay before the new deadline.

Either way, you know your status and you can prepare to file when it is most advantageous for you.

3. Do you normally use a tax preparer?

If you usually visit a tax preparer to get your taxes filed, you’ll need to take precautions.

In the current climate, social distancing has been highly recommended and mandated in some states. 

Call your tax preparer to see if you can work with them on your tax return virtually this year.

If you decide to work over the internet, be careful with how you transmit documents that include sensitive information such as your Social Security Number.

If you can’t work with your usual tax preparer without a face to face visit, you’ll have to consider your options. 

Unless you’re mandated by your government to do otherwise, it’s up to you whether you visit your tax preparer in person. That said, be aware of the risks before doing so.

You can also try your hand at preparing your tax return yourself using tax preparation software. Some companies offer live online help if you get stuck.

More Changes Could Still Be Coming

This is a fluid situation. More changes may occur in the future.

No one knows for certain how long COVID-19 will impact the United States and the rest of the world. 

Consult IRS.gov as well as your local and state tax agencies for the most up to date information regarding your 2019 tax return.