Coronavirus and your taxes

California is under the Shelter in Place mandate and it’s a little freaky out there. All these crazy changes to our way of life, our way of shopping (do you have enough toilet paper yet?), to our economy. Temporary, we expect. We hope. 

Of course one thing doesn’t ever change, does it? And you know I’m talking about taxes.

The IRS has just announced that the new filing and payment deadline for your 2019 individual income tax return is July 15, 2020. 

And if you are anticipating a refund, it is wise to file early so you can get your money sooner.

Having to pay is a different story. It’s natural to want to put that off to the last minute. The good news is that the IRS has extended your payment deadline to July 15, 2020. So if you have a liability, you may pay it at that time without being charged any interest or penalties. This good news includes an extension for the payment of your first installment of 2020 estimated tax payments. Those may be paid by July 15 as well without penalty or interest.

There is no additional paperwork required to take advantage of this extension. It is automatic. 

According to Spidell Publishing, an education resource for tax professionals:

“Any person with a federal income tax payment due April 15, 2020, who is affected by the COVID-19 emergency is eligible for the following relief:

• Deferral of up to $1 million in aggregate for all taxpayers other than C corporations, regardless of filing status (so the $1 million limit applies to joint filers); or
• Deferral of up to $10 million in aggregate for C corporations (the $10 million limit applies at the consolidated group level if the corporation is part of a consolidated group).

The relief only applies to:

• 2019 income tax payments due on April 15, 2020 (including self-employment taxes); and
• The April 15, 2020, estimated income tax payment due on April 15, 2020, for the 2020 taxable year (including self-employment taxes).

This federal relief is granted under IRC §7508A, which California conforms to. As a result, we believe California conforms to the July 15 payment extension.”

Also, according to Spidell Publishing, California just came on board today March 20 with the following legislation: “The FTB is postponing until July 15 the filing and payment deadlines for all individuals, trusts, and business entities for:

• 2019 tax returns;
• 2019 tax return payments;
• 2020 1st and 2nd quarter estimate payments;
• 2020 LLC taxes and fees; and
• 2020 Non-wage withholding payments. 

The FTB extended their initial extension period of June 15, 2020, to be more consistent with the IRS extension relief. Like the IRS extension, the FTB extension applies to both filing and payment deadlines, but does not limit the payment extension to those below $1 million ($10 million for corporations), and applies to estimated tax and withholding payments.

Like the IRS, the FTB is also extending this relief to all taxpayers, not just those “affected by the COVID-19 pandemic.”  

Stay safe, stay healthy. We will make it through this!

Bonnie Lee, E.A. is the owner of Taxpertise at 450 2nd St West, Sonoma. Her firm offers tax preparation and representation services, bookkeeping and payroll services. You can reach her at 707.935.1755 or via email bonnie@taxpertise.com.