As part of the government’s efforts to help avoid a recession, Treasury Secretary Steven Mnuchin announced the tax deadline would be pushed off by a full 90 days. Here’s what this announcement means for taxpayers.
How tax extensions normally work
Under normal circumstances, taxes are due by April 15. If tax filers can’t complete their taxes in time, they can request a 6-month extension without getting a failure-to-file penalty. Tax extensions are granted easily, but they don’t buy the filer more time to pay any taxes due to the IRS. The extension is only for submitting their returns. Any tax money that is paid after the 15th is generally subject to penalties and interest.
How tax extensions are changing this year
This year, things have changed. The tax deadline, both for filing returns and paying your tax bill, has been automatically extended for 90 days, until July 15. There will also be no penalties or interest for this delayed payment.
The administration believes this move will be a welcome relief for the millions of taxpayers whose income streams have been adversely affected by the COVID-19 outbreak. They’re also hopeful this delay, which will leave an estimated $300 billion in the battered economy, will give it a better chance at recovery.
For tax filers who are anticipating a refund this year, it may not pay to file late. An extra pile of cash, no matter how small, can really come in handy for those who are out of work. Signing up for direct deposit of refunds can help struggling taxpayers get that much-needed money as quickly as possible.
It’s also important to note that, while the federal government has granted this nationwide extension on tax bills, state taxes remain subject to the deadlines of their own governments. In light of the upheaval caused by the coronavirus outbreak, many states are offering their own extensions.
Visit our website for the most up-to-date Coronavirus information and find out how we’re partnering with members through the pandemic. Learn more about our Emergency Relief Loan and our special Loan Payment Relief program. It’s our way of helping our members through these trying times.
*Consult with a qualified tax professional for specific tax advice.