March 20, 2020 – April 15th Tax Deadline Extension [3:58]

SUMMARY: Firm founder, Cecil Nazareth, CPA, MBA explains important extensions for federal and state tax filers.

NOTE: Some information has changed since the podcast originally aired. Always check with your tax advisor.

The first golden rule is to stay safe and try to work remotely as much as possible. Social distancing is very important because the contagion is pretty widespread. 

So, onto the tax implications of this everyday evolving story. Some great news is that the tax filing deadline has been extended from April 15th to July 15th. That means the date to extend the return (and also pay) has been extended to July 15th. There’s no interest and penalty if you file by July 15th, but this limit only applies to people below $1 million, and for certain corporations. But for most of us, $1 million is a pretty high threshold.

Second, the impact on state filing is very different than the impact on federal, so don’t automatically assume the extension is the same. All states work differently. Let me give you an example of Connecticut: Connecticut has all passed-through entities. The due date was March 15th which has been extended to April 15th. This is just a one month extension, not a three month extension. The deadline for C-corporations was moved back from April 15th to June 15th. New York state has not even extended the deadline. I don’t know, I’m still waiting for them to catch up with everyone else. So those are two examples and most of our clients are in the tri-state area and will be affected by this.

Here are some suggestions that I just got from one of our clients. If you are due a refund and have all the information, then my suggestion is to file now and get the refund back so you can have more cash in your bank account. If you expect a refund after your tentative computation, then I really urge you to file a return.

However, if you feel like you are cash strapped and do not have money to pay to the IRS, use the 7/15 (July 15th) date. There’s no interest or penalty for payment on April 15th, so just keep that in mind.

The third thing I would mention is that you can file a return without paying the tax and the IRS will bill you accordingly. I had a client who came to see me a couple of days ago and didn’t have the money to pay his taxes–he owed $15,000, paid $7,000 and is now waiting for the IRS to bill him for the rest. He filed the return because he needed a tax return for another purpose which we can discuss at a later date.

Finally, I urge you to stay tuned because different sources are issuing a variety of guidance. The IRS is a good website www.irs.gov and your particular state organizations are also good sources. Those would be my three suggestions in getting authoritative guidance so you are in compliance. If you have any questions, feel free to give us a phone call and we will answer to the best of our ability. The situation keeps evolving and changing every day.

Contact me any time if you or someone close to you has concerns about tax filing deadlines at the state or federal level during these unprecedented times.