Tax Extensions: Key Provisions of the New Rulings

In response to the COVID-19 crisis, the IRS and State of California have announced the postponement of tax filing for tax year 2019.  You may be in the midst of your tax planning, wondering how this date change impacts you. Working with our long-time partner, David Holland with Holland & Associates, we’ve compiled this list of key provisions of the new rulings that may affect you. 

Tax Day is now July 15, 2020

Federal Provisions

The U.S. Department of Treasury has announced a 90-day extension for filing 2019 federal income tax returns and making 2019 federal income tax payments originally due April 15, 2020. From April 15 to July 15, no interest or penalties will be charged for late filing or late payments. 

Does this date apply to tax filing or tax payments? 

This extension and new July 15 deadline applies to: 

• filing of your 2019 federal income tax returns
• making of federal income tax payments for a taxpayer’s 2019 taxable year that were due April 15, 2020
• federal estimated income tax payments that were due April 15, 2020, for the taxpayer’s 2020 taxable year

Who does this deferment apply to? 

The deferment to July applies to all taxpayers, including individuals, trusts and estates, corporations, and other non-corporate tax filers, as well as those who pay self-employment tax.

• The July 15 date applies to all federal income tax returns for the fiscal year ended during 2019 that are due on April 15, 2020, whether that is the original due date or the due date on extension.
• Gift and Generation-Skipping Transfer Tax Returns (Form 709) and related payments have also been extended to July 15, 2020.

Does this change apply to funding my IRA, HSA or MSA accounts? 

• The time available to fund eligible 2019 IRA, HSA, and Archer MSA contributions has been extended from April 15, 2020, to July 15, 2020.

Do I need to file anything to claim the extension date? 

The extension of federal tax returns to July 15, 2020 is automatic. Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief. All anticipated tax payments should be made by July 15, 2020, to avoid interest and penalties after that date.

What federal tax provisions are unchanged? 

Certain federal tax provisions are unchanged, so please note that:

• Second quarter 2020 federal estimated income tax payments are still due on June 15, 2020.
• No extension is provided for the payment or deposit of any other type of federal tax, or for filing of any federal information return. Any taxpayers who have filing or payment due dates other than April 15 have not been granted relief at this time.
• Payroll and excise tax filings and payments are not extended.

The IRS is expected to release further guidance on these provisions in the days ahead.

California Provisions

The State of California has announced multiple extensions as well. In line with the federal extensions, the California Franchise Tax Board (“FTB”) has postponed until July 15. 

What California state tax deadlines are now July 15, 2020? 

 The filing and payment deadlines for all individuals and business entities for:

• 2019 tax returns
• 2019 tax return payments
• 2020 first and second quarter estimate payments (both payments now due on July 15, 2020)
• 2020 LLC taxes and fees
• 2020 non-wage withholding payments

Do I need to do anything to claim this extension? 

Since California conforms to the underlying code sections that grant tax postponements for emergencies, FTB is extending the relief to all California taxpayers. Taxpayers do not need to claim any special treatment or call FTB to qualify for this relief.

In addition, Governor Gavin Newsom has extended the filing and payment deadline to July 31 for a broad spectrum of business taxes. Specifically, businesses are eligible for the extension if they owe less than $1 million. 

We are here to help. 

Have more questions?  We provide customized financial planning and advisory services that address the unique needs of Bay Area residents. Learn more and contact us to set up a virtual meeting.