Who qualifies for the postponement?
The relief applies to any taxpayer with federal tax returns or payments usually due on April 15. That includes individuals, trusts, estates, partnerships, associations, companies and corporations. There are no limitations on the amount of tax that may be postponed, and taxpayers do not need to make a formal request in order to take advantage of the postponement.
What tax filings and payments are or aren’t covered?
The provision applies to all 2019 federal income taxes and self-employment taxes. Self-employed people may also postpone paying their estimated quarterly taxes for the first quarter of 2020, normally due on April 15, until July 15. But self-employed taxpayers should keep in mind that their estimates and payments for the second quarter will still be due on the usual date of June 15.
In addition, IRS Notice 2020-20 automatically postpones the traditional April 15, 2020, deadline for filing gift and generation-skipping transfer tax returns and making payments of gift and generation-skipping transfer tax to July 15, 2020.
Does this mean more time to contribute to an IRA or Health Savings Account?
Yes, in FAQs at its Filing and Payment Deadlines Q&A site the IRS states that the deadlines for 2019 contributions to IRAs and health savings accounts are extended from April 15 to July 15. (The IRS site cautions that the answers to its FAQs are not citable as legal authority.)
Are state and local taxes postponed as well?
“States generally follow the federal due dates, but it’s best to check with your individual state,” Drossman says. While many states have already announced plans to extend their filing and payment deadlines to July 15, 2020, a few have not yet announced extension plans.
Can taxpayers file for an automatic extension beyond the July 15 deadline?
Taxpayers have traditionally been able to request a 6-month tax filing extension by submitting the proper paperwork by April 15—a move that’s particularly useful for filers whose taxes are complex. However, they’ve still been required to pay their taxes by April 15. Under this year’s tax postponement, the deadline for requesting this extension is now July 15. If the extension form is filed by July 15, 2020, taxes will be owed on July 15, 2020, and the tax filing deadline becomes Oct. 15.
Is there any reason not to take advantage of the federal extension?
If you believe you have a refund coming this year, filing your return on April 15 rather than taking the postponement could mean that you receive it sooner. Whatever your situation, it’s important to speak with your tax advisor before making any decisions.