The tax-filing deadline is still April 15, but the IRS will waive penalties and interest on tax payments for 90 days
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- Treasury Secretary Steven Mnuchin announced on Tuesday that Americans who owe taxes can defer their payment for 90 days, interest and penalty free, up to $1 million.
- Mnuchin said Americans must still file their taxes by the April 15 tax-filing deadline if they want to get a tax refund or defer their tax payment.
- This post will be updated as more details about the tax relief guidelines are released.
- See Business Insider's picks for the best tax software »
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.
In a phone call with CNBC's Jim Cramer Wednesday morning, Mnuchin confirmed that the tax-filing deadline for individuals remains April 15, the outlet reported.
"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 in the White House briefing.
"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.
1. 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.
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 - 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.
3. 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?
This post will be updated as more details about the tax relief guidelines are released.
Editor's note: A previous version of this article misstated the amount of time it takes a typical taxpayer to get their refund. It's 21 days, not 21 weeks.
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