To help ease burdens associated with the Coronavirus (COVID-19) pandemic, the Internal Revenue Service (IRS) announced some changes to tax filing and payments in 2020. Below you will find a summary of major points of interest for Parkside Advisors clients. Should you have any questions or wish to discuss the information presented below further, please reach out to us.
Federal Tax Deadline Extended to July 15th
The Internal Revenue Service (IRS) declared that the deadline to file tax returns and pay taxes normally due by April 15, 2020 has been extended by 90 days to July 15, 2020. You will not owe interest or penalties if you pay by July 15th instead of April 15th. This automatic extension also applies to gift and estate tax filings that were originally due April 15th.
You can still request an extension to file your federal return by October 15th, but any tax due for 2019 must be paid by July 15th. If you wish to extend beyond July 15th, you should file your Federal extension request by July 15th at the latest.
California Tax Deadline Extended to July 15th
To match the Federal deadline changes, the California Franchise Tax Board (FTB) announced special tax relief for all California taxpayers. The tax return filing and payment deadlines have also been extended from April 15, 2020 to July 15, 2020.
After you file your California return and pay taxes by July 15th, the FTB will waive interest and any late filing or late payment penalties.
If you file a state return in a state other than California, filing deadline changes due to COVID-19 vary.
If You Accrued Penalties Prior to April 15th
If you accrued penalties (for either Federal or California taxes) prior to April 15th, you still owe the penalties through April 15th, then the penalties stop accruing as of April 15th, unless the IRS and FTB announce further changes.
Should You Take Advantage of this Extension?
If you have a large balance due for your 2019 returns or large 2020 Q1 estimated tax payments, you should consider taking advantage of this extra time to pay.
Conversely, if you are due a refund for 2019 in excess of 2020 Q1 and/or Q2 estimated taxes, you should consider filing your returns as early as possible to claim your refund.
Estimated Tax Payments for 2020 Q1 and Q2
Please note that the June 15th deadline to pay Q2 estimated taxes so far remains unchanged.
Q1 estimated taxes are now due by July 15th, which is after the Q2 deadline, unless the IRS and FTB make further changes in the coming months.
Retirement Plan Contributions for 2019 Extended to July 15th
The deadline to make contributions to retirement plans (IRAs, Roth IRAs, SEPs, etc.) has been extended to July 15, 2020 from the normal due date of April 15, 2020.
Required Minimum Distributions (RMDs) Waived for 2020
Required Minimum Distributions (RMDs) from IRAs and defined contribution plans, such as 401(k) plans are waived for 2020. The waiver includes RMDs that are due by April 1, 2020 because the owner turned 70.5 in 2019.
Parkside will revise this post as more information becomes available.
For additional information please refer to the IRS website.