How the Coronavirus Could Impact Your Taxes
***Please note some of the information below is subject to change as the situation is rapidly evolving***
The coronavirus outbreak is having an effect on every part of life here in Atlanta, as in many other parts of the world – and your taxes are no exception.
But there’s a lot of misinformation out there, and it’s easy to get confused.
Be wary of any information you don’t get from the IRS or official state channels – such as your state’s department of taxation and finance website.
We’re already fielding questions from our clients regarding how the coronavirus might affect their taxes.
Here are answers to some of the most common questions, as of this writing.
Do I Still Have to Pay My Taxes By April 15?
No, In the afternoon of Wednesday, March 18, the IRS released Notice 2020-17 granting an automatic extension of time to pay federal income taxes due April 15, 2020 to July 15, 2020. On Friday March 20, the IRS released an additional notice Notice 2020-18, which clarified that Taxpayers have until July 15, 2020 to file and pay income taxes without penalties and interest, regardless of the amount owed. This deferment applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax. This is for income tax only for the 2019 tax year. Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief.
If you have unpaid taxes after July 15, however, interest and penalties will be assessed for late payment. The only exception is if you request an extension to your filing deadline, in which case you have until October 15 to file without a late filing penalty.
Do I Still Have to File My Taxes By April 15?
No, the filing extension has been moved from April 15, 2020 to July 15, 2020. Life is getting unpredictable for all of us, though—so if you do need more time than July 15, 2020, you can still file for a six-month extension here for an extension to October 15th.
What If I’m Currently Paying Back Taxes or Having My Wages Garnished?
***updated information as of 3/25/20*** IRS Just announced they are temporarily suspending most collection activity, allowing taxpayers to suspend Installment Agreement Payments from April 1st – July 15th, and suspend payments on OICs until July 15th. Here is the full release – click here.
I Own A Business with Several Employees. Does The July 15 Extension Apply To Payroll Taxes?
For both individual and corporate taxes, the automatic payment extension applies only to your federal income tax bill—including self-employed income.
However, the IRS has granted payroll tax relief to employers of small and medium size businesses. The U.S. Treasury Department, IRS, and the U.S. Department of Labor announced March 20th that small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees. This relief to employees and small and midsize businesses is provided under the Families First Coronavirus Response Act (Act), signed by President Trump on March 18, 2020.
The Act will help the United States combat and defeat COVID-19 by giving all American businesses with fewer than 500 employees funds to provide employees with paid leave, either for the employee’s own health needs or to care for family members. The legislation will enable employers to keep their workers on their payrolls, while at the same time ensuring that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus.
What About State Taxes?
State taxes are not included in the payment extension, it’s only for federal taxes. Check with the taxation website in your state for details about your state tax payment deadline.
What If I’m Expecting A Refund? Will It Be Delayed?
As of this writing, there have been no announcements about delays to federal tax refunds. In fact, the government and various states have been encouraging taxpayers who are owed refunds to file as soon as possible, so they can get their refund in a timely manner.
I Have Questions About My Tax Situation. Who Can I Talk To?
This is a difficult and confusing time for everyone, and we’re committed to staying open and continuing our work for our clients.
If you have questions about your individual tax situation, we encourage you to get in touch for a free, confidential consultation. Give us a call at (404) 551-5838.8 right now. We’re here to take your call.