The coronavirus and your taxes

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

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

Many folks are under the misconception that the new filing deadline for your 2019 individual income tax return is July 15, 2020. But please note that the filing deadline has not been changed. Not yet anyway. You must still file your tax return by April 15, 2020 or you could be penalized for failure to file (25% of outstanding tax liability penalty). If you cannot file by the due date, file for an extension. You can do this at Irs.gov or by sending in Form 4868. 

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.

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.”

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