As the coronavirus pandemic continues to sweep across the world, our normal procedures and lifestyles have been forced to adapt. The United States 2020 Tax Season is no exception.
On March 17, 2020, U.S. Treasury Secretary Steven Mnuchin announced that the Internal Revenue Service (IRS) will extend the 2020 Tax Payment deadline. This tax extension was created to alleviate taxpayers coping with the pandemic and minimize economic upheaval. Yet, it’s an extension that has also invited confusion.
Need assistance with filing your personal or corporate taxes in 2020? Contact the experienced Las Vegas tax accountants at Larry L. Bertsch, CPA & Associates!
What Has Changed and What Hasn’t Changed?
To understand the tax extension deadline, it’s important to note that there are several types of taxes: individual taxes, businesses taxes, state taxes, and local taxes. Businesses taxes are inherently more complicated than the others because it requires more documentation. Businesses taxes also have additional categories, including corporate income tax, employer tax, partnerships, and self-employment tax via business structures, such as a limited liability company (LLC).
Each type requires different documentation. Each type also has a different deadline.
What you need to file depends on how your organization is structured.
Under normal circumstances, the deadline for filing and paying individual taxes is April 15, 2020. However, due to the coronavirus, the deadline to file and pay for these taxes has been changed and extended 90 days. It is now due on July 15, 2020. All subsequent interest and penalties that are normally due by qualifying taxpayers have been waived until July 15, 2020.
For an individual taxpayer or small business, this means that you can defer up to about $1 million in taxes. This tax extension deadline is provided to anyone with individual taxes.
Businesses also qualify for a tax extension, but face similar stipulations as individuals. Businesses must still file by April 15, and those that make quarterly payments are expected to continue making their quarterly payments after July 15. However, corporations can delay tax debts up to $10 million.
Businesses that are eligible for this extension are C-corporations, S-corporations, non-corporate taxes, and self-employment filers. C-corporations are taxed at the corporate level and (depending on dividends) at the individual level, too. S-corporations are taxed at the individual level, on the owner’s personal income tax; the business itself isn’t taxed. Examples of C-corporations are businesses that have many stakeholders, such as banks. S-corporations are often LLC organizations, sole proprietors or partnerships.Related: What Corporate Taxes Do Businesses Pay in Nevada?
State Income Taxes
Not all of this info may apply to you. Many states do not levy a state income tax, including Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. Some states (Tennessee and New Hampshire) do not tax wages earned. Some other states (California and Connecticut) already extended their state income tax deadlines for their residents. However, even if your business doesn’t operate in any of these states, you will still have to abide by the new IRS guidelines.
How to Delay Your 2020 Tax Payment
The silver lining in this tax extension is that after filing your taxes, the 90-day payment extension is automatically provided. Nothing else will need to be done on your individual or business’s behalf.
However, if you cannot file your taxes by July 15, 2020, you will need to request an extension. You can request this extension by filling out Form 4868 (Application for Automatic Extension of Time) either online or via mail. This extension would give you until October 15, 2020 to file your return, but your payment would still be due by July 15, 2020.
Will 2020 Tax Refunds Be Delayed?
Given all this tax extension deadline, one may assume that everything else will follow suit. At this point, though, there is no indication that 2020 tax refunds will be delayed. However, the coronavirus is a dynamic and ever-changing issue. The IRS plans to continue to update its site with additional info as needed. For more information or advice, please reach out to Larry L. Bertsch, CPA & Associates, at the “Contact Us” page or our number (702) 471-7223.