Owing to the recent COVID-19 pandemic, both the IRS and the U.S. Treasury Department have announced the deadline extension for filing and paying of the 2019 income tax liability for three months. This directive will be effective from April 15 to July 15.
You should, therefore, act swiftly on any tax preparation or refund process. In addition, both the White House and Congress are working on an economic stimulus package that will likely affect individual taxation in several ways.
Consequently, there will be no extension for the filing of other Federal tax returns and Federal information returns. Local and state tax filings may, however, still be required.
Deferment of payment of all Federal income tax liabilities
As per the guidance issued by the IRS, taxpayers can defer Federal income tax payments, which would otherwise be due on April 15, without incurring interest charges or penalties.
It is, however, critical to note that the delay is available with respect to Federal income tax payments for the 2019 taxable year that are due on April 15. The same also applies to Federal income tax payments that are due on April 15 for the 2020 taxable year.
It’s essential to note that this guidance doesn’t extend the due date for payments or deposits of other types of Federal taxes such as excise taxes. As of July 16, 2020, interest and other penalties will start to accrue if the deferred amounts aren’t paid by July 15, 2020.
The IRS doesn’t expect to delay the payment of Federal tax refunds. As such, local and state tax payments may still be necessary.
Impact on other tax-related rules
The IRS has permitted all high-deductible health insurance plans to cover all costs associated with testing for COVID-19 before any deductible, copays, or coinsurance is met. Taxpayers with a high-deductible insurance plan are, therefore, advised to check with their health insurance providers to confirm whether their plan is waiving the deductible. This is also necessary to see if your plan waives the coinsurance for Coronavirus testing.
As ever, taxpayers can seek professional help, which is the key to help everyone make the most of returns during this trying time. Don’t just presume that amendments are needed: stay informed.
