Economic News

IRS Extends 2019 Tax Payment Deadline to July

As the COVID-19 outbreak worsens, the virus is also wreaking economic havoc as many businesses are forced to close. In response the White House has been floating a number of emergency measures, including bailouts for certain industries and cash payments for the majority of Americans. Additionally this week the Internal Revenue Service announced that it would be extending the payment deadline for 2019 tax returns.

While taxes are famously due on April 15th of each year, Treasury Secretary Steven Mnuchin has announced that the IRS will now push the payment deadline to July 15th for most taxpayers. To be clear, individuals will currently still be required to file their returns by April 15th, although payments won’t be due until July as long as taxpayers owe less than $1 million on their 2019 taxes. This means that penalties and interest won’t begin to accrue on balances owed to the agency until July 16, 2020. According to the IRS, “Taxpayers do not need to file any additional forms or call the IRS to qualify for this relief.” Meanwhile C Corporations will also have their payment deadline extended for up to $10 million of their 2019 tax due.

Despite the extension, the IRS and Mnuchin advise that those who are due a refund should attempt to file their returns as soon as possible. As Mnuchin explained, “Americans should file their tax returns by April 15 because many will receive a refund. Those filing will be able to take advantage of their refunds sooner. He went on to elaborate about the change in deadline, stating, “This deferment allows those who owe a payment to the IRS to defer the payment until July 15 without interest or penalties. Treasury and IRS are ensuring that hardworking Americans and businesses have additional liquidity for the next several months.”

Another important note is that this announcement only pushes back the payment deadline for federal taxes. Although some states might follow suit, it’s important that taxpayers confirm that they won’t incur any penalties. Additionally, since the filing deadline continues to be April 15th, those wishing to make a contribution to a retirement account such as an IRA will need to do so before that date if they want it to apply toward the 2019 tax year.

Overall, the extension of the 2019 tax payment deadline doesn’t change filing deadlines. Nevertheless the move could offer some needed relief to taxpayers — especially those who are self-employed or who own small businesses. Of course, with the news about the outbreak developing quickly, it’s possible we’ll see further updates so be sure to keep an eye on IRS.gov.