COVID-19 has changed the deadline for 2019 tax filings and retirement account contributions to July 15th, 2020. The tax filing deadline change is part of the CARES Act (Coronavirus Aid, Relief, and Economic Security Act) stimulus package for tax payors. Additionally, the closure of Social Security offices, IRS tax collection processing centers, and state governments encouraging employees to stay home to help curb the spread of the virus would complicate the 2019 tax filing season without the extension. Here’s what you need to know:
IRS 2019 Tax Filing 90 Day Extension:
• The tax filing deadline extension should help individuals and businesses that need to pay additional taxes that haven’t yet filed to provide financial help while their income may be impacted.
• Individuals and businesses that have already filed their 2019 taxes will receive an additional 90 days to make their tax payments to avoid interest and penalties.
• Automatic payments that schedule through IRS Direct Pay will not automatically cancel or extend. IRS Direct Pay accounts will need to be modified by the individual using the confirmation number from the original scheduling confirmation email received.
• If payments are scheduled with an electronic funds withdrawal, you may cancel it by contacting the U.S. Treasury Financial Agent and make a request no later than two days before the scheduled withdrawal date.
• If you scheduled payment by debit or credit card, contact the card processor to cancel the payment.
Retirement Account Contribution Extension Relief:
• Because the tax filing date has extended, you now have an additional 90 days (July 15th, 2020 deadline) to make other retirement account contributions for 2019.
• If you already contributed your maximum for 2019, you will not be allowed to contribute more towards 2019 without a penalty.
• Employers that contribute towards their employee’s retirement savings plans as an employer contribution will have an additional 90 days, until July 15th, 2020, to make their contributions for 2019.
• For an individual that took a retirement savings account distribution in 2019 before age 59 ½ and had a 10% penalty, the penalty doesn’t need to be paid until July 15th, 2020. This extension only applies if the individual will file a tax return after April 15th, 2020, and hasn’t already filed their 2019 tax return.
Anytime an individual makes additional income, it must be reported on their income tax per IRS guidelines. However, the CARES Act stimulus payments will not be considered income when individuals file their 2020 income tax. If you have any questions regarding the CARES Act, reach out to your accountant to clarify how the act may impact you. If you’d like to make contributions to your retirement savings plan for 2019 and haven’t maxed out your limit, now is a great time to benefit through the CARES Act extension.