What to Know
- The federal agencies put to rest speculation that the due date for income tax returns would be extended beyond July 15. It will not be postponed.
- Tax payments for 2019, as well as the first and second quarterly payments for 2020, will be due on that day.
- Think you might need more time to file? Submit Form 4868 and get an extension to Oct. 15. Taxes owed must still be paid on July 15.
Uncle Sam has heard your requests for more time to file your taxes – and they have been denied.
The Treasury Department and the IRS will stick with the July 15 deadline for 2019 income tax returns and taxes owed for that year, the agencies said.
The announcement came less than a week after Treasury Secretary Steven Mnuchin said that pushing the deadline out further was “something we may consider.”
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People who are unable to submit their paperwork in two weeks can get an extension to Oct. 15. However, this is only an extension to file – not an extension to pay.
“The IRS urges people who owe taxes, even if they have a filing extension, to carefully review their situation and pay what they can by July 15 to avoid penalties and interest,” the agencies said in a statement.
Last year’s returns and taxes aren’t the only items due in two weeks. Quarterly filers must also pay taxes for the first two quarters of 2020 by July 15.
News of the IRS sticking to the deadline brought mixed reactions among tax professionals. Many of them are guiding small-business clients through the Paycheck Protection Program and contending with rapid-fire updates from Treasury and the IRS.
On top of that, accountants are also contending with the coronavirus that is surging in several states, which means they’re still not meeting clients and resuming business as usual. Many are dealing with the same issues plaguing remote workers today, including lack of childcare.
“It’s a bit disruptive because life keeps getting in the way,” said Nicole Davis, CPA and founder of Butler-Davis in Conyers, Georgia. “My workload has tripled, and I’m working long hours to meet deadlines for people who want to file on time.”
“Many firms have hard deadlines,” she said. “For us, it’s July 1. So if you can’t get it in by then, then you might end up on extension.”
Asking for more time
Going on extension this year will give you three more months to pull your paperwork together.
But it’s well worth the additional work if you think you might miss the July 15 deadline.
The penalty for failure to file is 5% of the unpaid tax you owe, assessed for each month or part of a month you’re late, up to five months.
Failure to pay your taxes on time can also sting.
In that case, the IRS will assess a 0.5% penalty of tax that isn’t paid by July 15. The taxman will continue to charge penalties and interest on the remaining unpaid balance until you’ve squashed the debt.
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There are many valid reasons why people might want to ask for more time to file, including the possibility that they may have complex tax returns.
At the same time, plenty of taxpayers continue to struggle with getting organized so they can hustle the return out the door.
“What’s disturbed me is that even though it’s July 1 tomorrow, some clients call and tell me that they don’t have their documents together,” said Sheneya Wilson, CPA and founder of Fola Financial in New York.
“You had time to plan, and you knew what was expected,” she said.
Knock out the paperwork
Still sitting on the sidelines with two weeks to go? Here are a few suggestions to move forward.
• Get in touch with your tax professional. Don’t wait until July 15 to talk to your CPA. Firms may set deadlines prior to that date to ensure they have enough time to work through returns.
Further, your CPA will still need to crunch the numbers to find out how much you’ll owe the IRS by July 15.
• Got a refund coming up? File now. You can’t get your cash until you turn in the paperwork. The average refund issued as of June 19 was $2,763.
• Owe Uncle Sam? Work out a payment plan. Aside from penalties, tax balances owed accumulate interest. Starting July 1, the interest rate for underpayment is 3%.
Go to IRS.gov/payments to review the agency’s different installment plans.
There are zero set-up fees for short-term payment plans — 120 days or less — but you’re still responsible for accrued penalties and interest until you’ve paid the tax.
This story first appeared on CNBC.com. More from CNBC: