What You Need to Know
2020 has been unprecedented in so many ways. Given the Coronavirus, the taxing authorities have decided to extend a number of tax deadlines to ensure that taxpayers have sufficient time to adequately prepare and pay their taxes. Here are some of the recent tax changes you should be aware of.
2019 Tax Filing Deadline: The IRS changed the April 15, 2020 deadline to file your 2019 federal tax return. It has been extended to July 15, 2020.
Interest and Penalties: As long as taxes are paid by July 15, 2020, no interest and penalties will be charged for the period between April 15, 2020 and July 15, 2020.
2020 Tax Estimates: Typically, first quarter tax estimates are due by April 15th and second quarter estimates are due by June 15th. The IRS has extended both of these deadlines to July 15th. Some states have matched these new dates and others have not. Please check with your tax preparer so you don’t miss a deadline.
Other Tax Deadlines: Many other IRS tax deadlines that would have occurred between April 1, 2020 and July 15, 2020 have been extended to July 15, 2020.
Withholding Taxes: The CARES Act allows the payment of the company’s portion of Social Security withholding taxes (6.2%) to be deferred until 2021 and 2022, with half due each year. Medicare withholding taxes must continue to be paid on time and the employee’s portion of Social Security withholding must also continue to be paid on the usual schedule. However, if the employer participated in the Payment Protection Program (PPP), different rules may apply.
State Filing Deadlines: Each state has the ability to make their own rules. Some have matched what the IRS has done while others have not. Check with your tax preparer if you have any questions.
Residency Audits: The state taxing authorities are looking at where taxpayers decided to “shelter-in-place” during the pandemic. For taxpayers that have homes in multiple states and spend more than 183 days in their residency state, these rules continue to apply in 2020.
Tax rules continue to change as circumstances dictate. Make sure to ask questions, as many of the old tax rules are just not true in 2020. We are happy to help.