Tax Relief for Taxpayers Affected by the Coronavirus Pandemic
Taxpayers who owe taxes may have gotten a little bit of a break this year, but it may not be enough for those who cannot afford to pay their entire tax bill. Along with economic impact payments for taxpayers that qualify, the IRS is offering tax help for those affected by the coronavirus pandemic by extending due dates to July 15. This is in response to the disruption of income for many taxpayers and business owners who may find it difficult to pay their taxes this season.
What Happens When July 15 Rolls Around?
It is possible that individual taxpayers and some businesses may not be able to make their required tax payments once July 15 arrives. Right now, some taxpayers may be going through the uncertainty as jobs are lost and businesses that closed during the coronavirus crisis may never reopen.
For those unable to pay their taxes, there are several options. Taxpayers may file for another extension, but they will be penalized with penalties and interest on what they owe. A better plan may be filing for a payment plan now instead of waiting until July 15 or filing an offer in compromise.
Aid from Economic Impact Payments
Through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, many Americans were eligible for a one-time stimulus check sent by the Internal Revenue Service. This economic impact payment of up to $1,200 per eligible taxpayer, $2,400 for eligible married couples also provided an additional $500 per eligible child.
Taxpayers who previously used direct deposit for this year’s or last year’s federal tax filings received their payments in the bank accounts. Those who did not use direct deposit received checks in the mail. The IRS created a “Get My Payment” application to help taxpayers check their payment statuses and enter their bank account information if they had not used direct deposit when filing their taxes.
Automatic Extension for Federal Income Tax Filing
On March 23, the U.S. Treasury Department and the IRS announced that they were automatically extending the federal income tax filing due date to July 15, 2020. Filers do not need to apply for an extension, because it is automatic. Because the IRS is still operating, taxpayers are encouraged to file their taxes as soon as possible, especially if they are entitled to a refund this year. This will help avoid delays as the new filing date approaches.
Deferment of Income Tax Payments
Taxpayers who owe taxes or are required to make quarterly tax payments have received tax relief help from the IRS. Individuals and other non-corporate tax filers may defer up to $1 million in federal income tax payments, including self-employment tax until July 15, 2020. Corporate taxpayers may defer up to $10 million in federal tax payments. This penalty and interest-free extension is intended to give taxpayers and businesses increased liquidity that can help keep the economy moving.