Last day to file taxes. In March of 2020 the Treasury Department and Internal Revenue Service announced the federal income tax filing deadline was being extended from its normal April 15th annual deadline to July 15th for 2020. Well, that time is now upon us. There are a few things to know about this extension. It not only allows Americans to extend the time available to file taxes, but it also allows an extended time to pay any federal taxes owed and the time to contribute to a qualified retirement plan. What the provision does not cover is situations in which individual filers need additional time to file beyond the July 15 deadline
Due to President Trump’s emergency declaration in response to the COVID-19 virus in mid-March, the Treasury Department and IRS made the decision to postpone the April 15th tax return due date to July 15, 2020 in order to provide a form of relief to American taxpayers. This provision was deferred automatically and there is nothing that a taxpayer is required to do to qualify for the postponement. All taxpayers, whether a person or entity, were allowed to delay filing taxes until today, July 15th. The extension to file provision covers all individuals, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax.
As mentioned several times already, the Treasury Department and IRS extension allowed filers the flexibility of postponing tax filing. The extension also allows deferment of payments of federal taxes owed from April to July 15th. This deferment is allowed regardless of the amount owed and without accruing any penalties and interest. But, today is the last day for the provision. After July 15th, penalties and interest will again be applied.
Another great benefit of the filing extension is that we had more time to contribute to a qualified retirement plan for credit to the 2019 tax year. This includes but is not limited to Individual Retirement Arrangements (IRAs) such as Traditional and Roth IRAs; employer plans such as 401(k) or 403(b); small business retirement plans such as a Simple IRA or SEP Plans and so on. If you are looking to claim an additional deduction, a traditional IRA is tax deductible. Contributions to a Roth IRA, however, are not tax deductible, but you can still contribute the maximum for 2019. The maximum contribution amount for a Traditional IRA is the lessor of $6,000 or the amount the taxpayer earned during the year. In other words, you cannot contribute more than you earned. The maximum allowed contribution for a Roth is limited by the Modified Gross Income. If you are 50 years or older you can contribute up to $7,000 for the 2019 tax year. This is called a makeup contribution. Visit the Internal Revenue Service website for more details about contributions.
So far, I have only mentioned a few of the items covered by the tax filing extension. There are situations in which the extension does not provide a benefit. Individuals who do not file by today’s deadline, July 15th, must submit a request by filing Form 4868 for an extension to file. Any taxes owed must be paid today, though, or you could experience penalties and late fees. Now, also be aware that when you file a request for an extension, that new deadline is October 15th. If this deadline is not met, there is not COVID-19 provisions to allow you to file taxes beyond this date penalty or fee free.
For more details about the information covered in this article take a look at the video below from the irs.gov website or visit the any of the IRS websites by clicking the links below:
The IRS Extends Filing Deadline
