By Stephen Fournier – KeyBank Central New York Market President
Most years, the beginning of March to mid-April is the hectic home stretch of tax season in America, with families, individuals and businesses all aiming to hit the traditional filing deadline.
With so much well-warranted focus on dealing with COVID-19’s impacts across the country, though, 2020 is clearly not “most years.” And in March, the Treasury Department and Internal Revenue Service (IRS) extended the filing date for your 2019 federal income taxes to July 15, 2020.
The extension is automatic, and everyone qualifies: There are no additional forms to fill out, and you don’t need to let the IRS know if you’ll be filing after the traditional April 15 deadline. It’s one less thing you have to worry about this spring. The IRS announcement also extends the deadline for making contributions to individual retirement accounts or health savings accounts for the 2019 tax year to July 15, 2020. Taxpayers making first-quarter estimated income tax payments in 2020 – typically paid by independent contractors or freelancers – now have until July 15 as well.
It’s important to note that the IRS extension applies only to federal income tax filing. If you’re required to file state taxes, you’ll need to check to see whether your state has also extended the deadline. The Federation of Tax Administrators website provides links to state tax agencies.
If you’ve already prepared and/or filed your 2019 federal income taxes and owe money to the federal government, the due date for payment without penalty has also been extended to July 15, 2020. This applies to individuals, as well as trusts and estates, corporations, other non-corporate tax filers, and those who pay self-employment tax.
Exceptions, Extensions and More
That said, not all tax due dates have been moved. For instance, the second-quarter 2020 estimated tax payment deadline of June 15 has not been extended (that’s right: it’s due before the first-quarter estimated tax payment). Additionally, normal filing and payment due dates apply to estate taxes, although filing and payment for gift taxes is now due by the July 15 deadline. Basically, any returns with filing or payment due dates other than April 15 are still due by those dates.
Of course, just because you can wait a few more months to file your federal income tax return doesn’t mean you should: If you’re due a refund, we recommend filing as soon as possible. The IRS is still issuing most tax refunds within about three weeks.
And if you wind up needing additional time to file beyond the July 15 deadline, you can still use the usual channels – a tax professional, tax software, or the Free File link on IRS.gov – to request a filing extension. Individuals should use Form 4868, while businesses needing an extension will use Form 7004. (Approval of these extensions only gives you more time to file: They don’t extend the penalty-free period on taxes owed.)
The IRS has set up a detailed Frequently Asked Questions page where you can learn more:
https://www.irs.gov/newsroom/filing-and-payment-deadlines-questions-and-answers
About the author: Stephen Fournier is President of KeyBank’s Central New York Market. He may be reached at either
315-470-5096 or [email protected].
How to Maximize Your Tax Refund
The average tax refund is $3,163 — which for many is the largest chunk of cash they’ll receive during the year. What are some strategies you can use to make that money last and help improve your finances?
Here are a few ideas on how to maximize your tax refund:
Spend Part of It and Save the Rest
Make a pact to only spend a small portion of it, then put the remainder into savings to make it last longer. This way, you'll balance your desire to have some fun today with your overall financial well-being.
Put It Toward an Emergency Fund
If you need urgent dental work, a major car repair, or if you find yourself out of work, your emergency fund will provide the financial cushion you need should an unexpected expense arise. Your tax refund check is an easy way to significantly bolster your emergency fund.
Pay off Debt
Consider using funds from overpaying on your taxes to make headway on paying off your debt. In turn, you’ll be able to save money on interest fees, and feel as if a burden has been lifted off of your shoulders. Not sure where to start? First off, be sure that you know where all of your debt is, the total amounts, and the interest rates. Then, focus on any high-interest debt first, such as credit cards.
Receive Your Refund via Direct Deposit
Eight out of 10 taxpayers receive their refund by having it deposited directly into their checking or savings accounts. It’s quick, easy, and you’ll most likely be less tempted to squander it. Remember that money you don’t see is money you won’t spend.
Consider Adjusting Your Paycheck Tax Withholding
If you’re typically short on cash during the year, consider adjusting your withholding so that you can keep more money in your bank account. The money you get each month could really help you cover your bills and free you from financial stress all year long.
