Stay Informed on Your Taxes: You’re Not Off the Hook
The IRS has postponed the due date for tax payments. Tax year 2020 Payments normally due on April 15th can be paid by July 15th without additional interest or penalties. The payments deferred until July 15th include 1st quarter estimated tax payments that are normally due on April 15th.
Note this only applies to the 2020 tax year. If you did not make required estimated payments for your 2019 tax, you will still be assessed a penalty if you pay by July 15th. However, the penalty will be the same as if you had paid on April 15th.
The due date to file your tax returns remains April 15th and, as usual, a six month extension is available.
What does this mean to you? If you have a balance due after your return is prepared, you can wait until July 15th to pay it. There will be no additional penalties beyond what there would have been on April 15th. If you get a voucher for a first quarter 2020 estimated payment, you can also wait until July 15th to pay that. No penalties or interest will be applied.
If we are filing an extension for you and you owe taxes with the extension, you can wait until July 15th to pay the extension amount; HOWEVER the extension still must be filed by April 15th.
Note that state tax adjustments vary, so be sure you understand the measures your state is taking. In my home state of Montana, for example we are following the federal filing extensions to July 15th.
Why would you want to wait to make your payments until July? If you know you have paid the 2019 taxes in full, then hold onto your money. The IRS is thinking it may alleviate cash flow issues if you are experiencing them. That may or may not be true for you. If it is true, then plan well so you are able to use the funds now and make your payment on time in July. If it is not true for you, make the money go to work for you until it is due!
Not clear on what you owe? Be sure to work with your accounting officer as soon as possible to bring your 2019 information current!