The 2020 tax season is underway, but millions of Americans have yet to start preparing their tax returns. Earlier this week, in response to the COVID-19 pandemic, Treasury Secretary Steven Mnuchin offered taxpayers a 90-day reprieve on paying their income taxes. As of Friday, March 20, the deadline to file tax returns has also been extended by three months. Taxpayers will now have until July 15th to file and pay their 2019 income taxes (up to $1 million). During this time, filers will not incur interest on unpaid taxes or be subject to tax filing penalties. This reprieve amount would also likely apply to small businesses and pass-through entities. Corporate filers, on the other hand, would get the same length of time to pay amounts due on up to $10 million in taxes owed.
Historically, taxpayers procrastinate on their taxes, but it is prudent to prepare tax returns well in advance. In 2018, it was estimated that over 14 million people waited until the last day to file their returns, causing the IRS website and filing system to crash in the early morning hours. The situation was not resolved until early evening, and although the IRS extended the filing deadline, panic ensued for many taxpayers who had waited until the last day to file.
Despite the 3-month tax filing extension, taxpayers may again put off filing their taxes— especially as COVID-19 continues to interrupt daily life and cause financial strain. Additionally, taxpayers may continue to need guidance in interpreting and understanding the significant changes stemming from the Tax Cuts and Jobs Act, which is still quite new. To help answer common questions about the 2020 tax season, we’ve created a tax “cheat sheet”.
Contact us today so we can assist you in navigating these 2019 changes.