2020 tax deadline, should I pay now or later?

2020 tax deadline

The 2020 tax deadline changed due to the COVID-19 pandemic.

This new coronavirus has dramatically decreased economic activity in the United States.

The IRS decided to use its authority in the midst of this national emergency to postpone certain tax returns and payments.

This change affects us all, and the rules can be misleading – after all, they’re still tax laws.

In this article we will explain:

  • Who gets this tax relief
  • What exactly the IRS postponed
  • What was not postponed

Also, we will tell you if you should file early despite the decision to postpone taxes.

Let’s start!

Who qualifies for the 2020 tax deadline relief?

First, to qualify for postponement, you must have a tax return due on April 15, 2020.

Generally, the statements that expire on April 15 are:

  • Individual completing the 1040 form
  • Trust or state that completes form 1041
  • Society that fills the form 1065
  • Corporation that completes form 1120

In addition, the due date of any of the following must be April 15, 2020:

  • The annual income statement for the year 2019
  • Payment of taxes for fiscal year 2019
  • Payment of estimated taxes for fiscal year 2020

Do not qualify for postponement relief:

  • Federal payroll taxes, including federal tax deposits
  • Federal information statements

New deadline for federal tax filing

If you qualify for relief, your 2019 federal income statement now expires on July 15, 2020.

You do not have to fill out any extensions on form 4868 or form 7004, or contact the IRS to obtain the postponement until July 15.

If you need additional time to make your return after July 15, you can make a form 4868 or a 7005 before the 2020 tax deadline, and you will have an automatic extension to:

  • September 30 for forms 1041
  • October 15 for forms 1040 and 1120

IRA, HSA payments and retirement plans

The relief for COVID-19 also postpones until July 15, 2020 the deadlines of the following payments:

  • Contributions to individual IRA retirement accounts
  • Payments to HSA Health Savings Accounts
  • Contributions to retirement plans

Should I wait to file your taxes?

If your tax return has a refund, file as soon as you can. This way you will have your money as fast as you can.

If you have the liquidity to make your tax payments on April 15, but maintaining these payments generates extra interest income, it is not a bad idea to delay the payment until July 15.

If it is difficult for you to make estimated tax payments on time, we recommend that you keep the usual schedule as soon as you have the liquidity to make the payments.

Recap on the tax due date relief

You don’t want to delay payments and create a potential unpaid account on your 2020 tax return balance.

Due to the COVID-19 emergency, the IRS provided relief for certain tax returns and payments.

The new deadline is July 15.

If you have a refund, there is no reason to postpone the return.

Therefore, you should do it as soon as possible to get that money back.

Even if you have the money and liquidity now to make the payment, there is no reason to do so now.

You can reserve that money and earn interest that will help you have cash reserves for uncertain times.

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