Federal Tax Extensions During the Pandemic - What You Need to Know

Businesses and individuals throughout Maryland are facing financial challenges because of the COVID-19 pandemic. The Internal Revenue Service (IRS) has extended Tax Day from April 15, 2020, to July 15, 2020. However, what does that mean for individuals and businesses? Our Maryland tax attorney answers common questions about the COVID-19 federal tax extensions in this blog.

Important Things to Know About the COVID-19 Federal Tax Extension

The IRS Is Accepting And Processing Tax Returns

Even though the filing date for federal tax returns is now July 15, 2020, the IRS is currently accepting and processing tax returns. If you anticipate a refund, file your income tax return soon so you can receive your refund.

Tax Payment Deadline Is Extended

The deadline to pay taxes is also extended to July 15, 2020. If you owe taxes for 2019, you now have until July 15, 2020, to pay those taxes without penalty or interest.

Who Is Eligible For The COVID-19 Federal Tax Return Extension?

Individuals filing personal income tax returns are eligible for the extension. Corporations filing Form 1120 and trusts filing Form 1041 are also eligible for the federal tax extension for 2019 tax returns. Estates, individuals who pay self-employment taxes, and expats (Americans living abroad) are also included in the federal tax extension.

Additional Extensions Are Available

You need not do anything to receive the COVID-19 tax extension through July 15, 2020. The extension is automatic for eligible taxpayers.

However, if you cannot file your tax returns by July 15, 2020, you can request an extension to file your tax return until October 15, 2020, by filing the appropriate request for extension with the IRS before July 15, 2020. Americans living abroad (expats) can also request an extension through October 15, 2020, to file their tax returns.

Taxes Are Due On July 15, 2020

If you owe taxes, your payment will still be due on July 15, 2020, even though you request an extension to file your tax returns. Taxes that not paid by July 15, 2020, are subject to penalties and interest.

The extension to pay taxes does not apply to other types of federal taxes, such as payroll taxes. The July 15, 2020, extension to pay taxes only applies to income taxes.

Tax Credits Are Available For Some Businesses

Various tax credits may be available for businesses to offset the losses related to COVID-19. Business owners can consult with their tax attorneys or tax professionals to determine if they may be eligible for the tax credits.

Federal Tax Extensions Do Not Automatically Extend State Tax Deadlines

The IRS tax extensions apply only to federal tax returns. Many states have also extended the deadline to file state tax returns in response to the COVID-19 pandemic. Maryland has slightly different tax deadlines for business-related tax returns.

Maryland business-related tax returns and payments are due by June 1, 2020. Maryland individual income tax returns and payments are due by July 15, 2020. Individuals who file for a federal tax return extension through October 15, 2020, must also file their Maryland individual tax returns by October 15, 2020.

Contact a Maryland Tax Attorney If You Have Questions

There may be numerous tax consequences that impact individuals and businesses after the coronavirus pandemic has passed. If you have questions about individual or business tax matters, contact our Maryland tax attorney for assistance.