Tax payments deferred until July 15

 March 23, 2020

In a press briefing Tuesday morning, Treasury Secretary Steven Mnuchin said that individual taxpayers who owe up to a million dollars in federal taxes can defer paying until July 15, while corporations can defer up to $10 million.

“All you have to do is file your taxes – you’ll automatically not get charged interest and penalties,” he said. “We encourage those Americans who can file their taxes to continue to file on April 15, because for many, you will get tax refunds, and we don’t want you to lose out on those refunds.”

Last tax season close to 72% of taxpayers received a tax refund close to $3,000, which for many taxpayers is their largest paycheck of the year. During times like this, that is much needed money for many households. The IRS expects to continue to process refunds as normal. The IRS typically issues nine out of 10 tax refunds within 21 days or less from acceptance with e-file and direct deposit – the fastest way to get your refund.

Mnuchin made a point of saying that taxpayers could still file for extension, which would allow them to defer filing and payment until October 15.

“This is disappointing,” said Neil Fishman, president of the National Conference of CPA Practitioners. “From everything that was coming out, we expected they were going to grant a filing extension. But they’re not granting a filing extension – they’re granting a payment extension.”

“If I don’t file for an extension but pay within next 90-day period, the question is, will they waive the failure to file penalty?” asked Roger Harris, president of Padgett Business Services and a past chair of the IRS Advisory Council. “They’re waiving all penalties for not paying, but what about for not filing? Some in media are saying he waived both, but that’s not what I heard him say. Does this waiver also apply to the estimated tax payment due on April 15 by some taxpayers?”

Harris said that he believes the reason the government is only talking about extending payments is that it doesn’t put pressure on the states to change their filing dates. “By just extending the payment date, it doesn’t force states to consider changing their filing date,” he explained. “They just have to decide if they want to defer payment, penalty and interest free, or not.”

Relief for Individual Taxpayers

Eligible employees impacted by Coronavirus (COVID-19) may receive paid sick and emergency sick leave.

  • Emergency Sick Leave. If you are an employee and were required to be quarantined, took care of a family member who was required to be quarantined, or had to care for your child due to school or daycare closures you may be able to take 12 weeks job-protected leave under FMLA.
  • Paid Sick Leave. If you are an employee and you were quarantined or seeking care for COVID-19, you may receive two weeks paid sick leave at full pay and two-thirds pay to care for a family member or child.

Relief for Self-Employed and Small Businesses

The Families First Coronavirus Response First Act provides relief in the form of refundable tax credits for sick leave and family leave for both eligible self-employed and small business owners.

  • Self-Employed Tax Credit for Sick Leave. If you are self-employed, you may be eligible for a refundable tax credit equivalent to a qualified sick leave amount. Qualified sick leave is based on your average daily self-employment income.
  • Self-Employed Tax Credit for Family Leave. If you are self-employed you may be eligible for a refundable tax credit equal to 100 percent of a qualified family leave equivalent amount for eligible self-employed individuals.
  • Small Business Tax Credit for Paid Sick Leave. If you are a small business owner and paid sick leave wages to your employees you may be eligible for a refundable tax credit equal to 100 percent of qualified sick leave paid.
  • Small Business Tax Credit for Paid Family Leave. If you are a small business owner and paid qualified family leave wages to employees, you may be eligible for a refundable tax credit equal to 100 percent of qualified family leave wages paid.

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