Very few aspects of American life, if any, remain unaffected by the coronavirus. Taxes are no exception.
On Tuesday, Treasury Secretary Steven Mnuchin announced during a White House briefing that the IRS will waive interest and penalty charges for 90 days for Americans who owe up to $1 million in taxes. He encouraged Americans to still file their taxes by April 15; it’s unclear at this time whether the IRS will officially extend that filing deadline as well.
“If you owe a payment to the IRS, you can defer up to $1 million as an individual — and the reason we are doing $1 million is because that covers pass-throughs and small businesses — and $10 million for corporations, interest-free and penalty-free for 90 days. All you have to do is file your taxes,” Mnuchin said.
“We encourage those Americans who can file later taxes to continue to file their taxes because you will get tax refunds and we don’t want you to lose out. Many people do this electronically which is easy for them and the IRS,” he said.
Mnuchin said last week that he was working with the Trump administration to provide tax relief for “virtually all Americans other than the superrich.”
The IRS is so far processing tax returns and paying out refunds with no apparent delay, though IRS Commissioner Charles Rettig said employees who are eligible to work remotely should do so.
Some individual states, including California and Connecticut, have extended state tax return filing deadlines for residents.
Here are a few reasons to file your taxes now.
- File now if you want your refund
As of now, the IRS will continue to process tax returns and pay out refunds as usual. If you’ve been looking forward to getting a check from the government, you’ll need to file your return to get it.
The IRS recommends e-filing and choosing direct deposit to get your refund as soon as possible. Nine in 10 taxpayers who use this method and are owed a refund typically get theirs within 21 days of submitting their return.
As of the first week of March, the average taxpayer receiving a refund was getting about $3,000, according to IRS statistics. If your job doesn’t support remote work or you’re on unpaid leave during the coronavirus outbreak, you’ll probably want the extra cash.
- You won’t be totally off the hook for your tax bill
Typically, if you don’t pay any tax you owe by the tax filing deadline — April 15 — the IRS will charge you a penalty and interest on your outstanding balance.
Mnuchin announced on Tuesday that individual taxpayers could defer up to $1 million in tax payments for 90 days. Deferment is just postponement; barring any additional government relief, you’ll have to pay your balance when the deferment period is up. The upside is that you won’t be charged interest or penalties during this time.
The financial markets are in bad shape right now and it’s trickling down to our wallets, but there’s no telling how bad it could get. If you have the money to pay your balance, you might as well get it over with. There is an exception, though, Mike Savage, a CPA and CEO of 1-800-Accountant, told Business Insider: If you owe a lot, and the interest is waived, it won’t hurt to wait.
- If you don’t file now, you’ll have to do it later
The IRS is not extending the tax deadline, so if you don’t file by April 15, you may still be charged a separate penalty for not filing. If you can’t begin to think about gathering all your tax documents and sitting down to file — or contacting an accountant to do it for you — consider requesting an extension as soon as possible.
But while an extension is appealing to the procrastinator in all of us, if your tax situation is simple enough to prepare and file online in a couple of hours, it’s probably a good idea to get it over with. What else were you going to do with all that free time in self-quarantine?
SteelPeak Wealth –
Institute of Portfolio Management & Economic Strategy
Steel Peak Wealth Management, LLC (“Steel Peak”), an SEC registered investment adviser located in California, is providing this presentation for informational purposes only. There is no guarantee that any views, projections and/or opinions expressed herein will come to pass. Investing in the stock market involves the potential for gains and the risk of loss. Information presented herein is subject to change without notice. Steel Peak may only transact business in those states in which it is notice filed or qualifies for an exemption or exclusion from notice filing requirements. This email should not be construed by any consumer and/or prospective client as Steel Peak’s rendering of personalized investment advice. Any subsequent, direct communication by Steel Peak with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of Steel Peak, please contact the United States Securities and Exchange Commission on their web site at www.adviserinfo.sec.gov. A copy of Steel Peak’s current written disclosure brochure discussing Steel Peak’s business operations, services, and fees is available from Steel Peak upon written request. Original article sourced from Tanza Loudenback, Business Insider @ https://www.businessinsider.com/personal-finance/irs-to-extend-tax-filing-deadline-why-file-taxes-now-2020-3