The federal tax deadline is now July 15. Here are 3 reasons you should probably still do your taxes as soon as possible.
- The IRS is giving Americans an additional 90 days - until July 15 - to file and pay federal taxes in response to the COVID-19 pandemic.
- If your tax situation is simple and you're not directly impacted by the coronavirus, you should still file your taxes as soon as possible.
- As of now the IRS is processing returns and paying out tax refunds, but that could change.
- See Business Insider's picks for the best tax software »
The IRS has postponed the tax deadline 90 days, to July 15.
It's a generous gesture meant to ease the financial strain many Americans are facing as the coronavirus continues to shut down businesses and put of millions workers out of a job.
But anyone who isn't sick or directly impacted by the coronavirus should consider filing their taxes as soon as possible. Here's why:
1. File now if you want your refund
If you've been looking forward to getting a refund check from the government, you'll need to file your return to get it. As of now, the IRS will continue to process tax returns and pay out refunds as usual, but that could change as if restrictions on businesses and government operations ramp up.
In a tweet on Friday, Treasury Secretary Steven Mnuchin urged taxpayers to be proactive: "I encourage all taxpayers who may have tax refunds to file now to get your money." While Congress is working on a stimulus package that will send relief checks to many Americans, it's unclear who will qualify and how quickly that money will get to individuals.
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.
2. 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 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 until July 15, interest and penalty free. 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.
3. If you don't file now, you'll have to do it later
It may be tempting to put off filing for a few more months, but you'll have to do it eventually. The IRS has yet to release details on whether it will be enforcing a penalty for late filing beyond the July 15 deadline, but it's likely.
And while some states are extending their income tax deadlines as well, there's no guarantee your state will grant taxpayers additional time to file. Online tax preparers like H&R Block and TurboTax make it very easy to prepare and file your federal and state taxes simultaneously - if you're already doing your state taxes, you may as well do your federal.
This extension to file and pay taxes is appealing to the procrastinator in all of us, but 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?
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