Tax Day 2020 is July 15. What you need to know, from a Samford tax expert

Back in April, there was much rejoicing when Tax Day 2020 was postponed ‘till July 15. At the time, we wrote this story, based on information from a local CPA and Samford Brock School of Business instructor Cam Pearce. Now we’re back—Cam Pearce was kind enough to grant us an exclusive interview about the looming July 15 tax deadline. Here’s what you need to know.

July 15 is now the revised tax day for three important deadlines. Can you tell us what these are?

Pearce: There are actually three deadlines that have moved: 

• The annual individual and corporation federal income tax filing/payment date of April 15^th to July 15^th. This also applies to estates and trusts.
• The 1^st and 2^nd quarter estimated payments for individuals and corporations have moved from April 15^th and June 15^th to July 15^th. If you need to pay estimated taxes,  find out how.

What do people need to know as they prepare to file and/or pay their taxes by July 15?

Pearce: The automatic extension from April 15 to July 15 can affect everyone. The extension does not require you to check a box, call the IRS or complete an additional form. The extension is truly automatic!

However, if you are due a refund you are more than welcome (and encouraged) to file earlier than July 15th. If you are expecting a refund, the IRS expects that most refunds should arrive within 21 days.

Will there be penalties for late payments if people are just now paying their taxes now?

Pearce: There is no interest or penalties for paying 2019 taxes by July 15, 2020. 

If a taxpayer pays after July 15^th, they are subject to interest and penalties. 

What about if this isn’t enough of an extension? Is it possible to file for another extension? If someone does that, what do they need to know?

Pearce: If you need an additional extension, it’s due July 15th—you’ll have ’till October 15 to file your taxes. Individual taxpayers can file Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. 

If you still need to file an extension, note that the payment is due July 15^th—while the tax return filing is extended, the payment date is not.

What if people haven’t even thought about their taxes this year, with everything else going on? Where should they go for help?

Pearce:  The good news is, there is still time! You can pay your 2019 taxes by July 15^th interest and penalty-free! 

• United Way is a great resource. 
• Tax help is available 24/7 on IRS.gov.
• The IRS website also offers a variety of online tools to help taxpayers answer common tax questions. Taxpayers can schedule their payment electronically by phone or using their mobile device and the IRS2Go app. 

What about all the COVID what ifs?

For example, what if your income’s gone down or you’ve lost your job?

For this one, we went straight to the IRS. They have three options for people who can’t pay now: 

• Apply for a payment plan that will allow you to pay monthly
• You may be eligible for an offer in compromise—this is a way to settle your debt for less than the full amount you owe.
• Request a temporary collection delay—this can give you time to get your finances back on track.

Do people owe taxes on their stimulus check?

Pearce: Taxpayers do NOT owe tax on their Economic Impact Payments (stimulus payments). The payments are excluded from gross income. The payment will not increase an individual’s federal income tax for 2020 or increase a refund they receive. 

Bham Now: For other questions, including if you haven’t received your payment yet, check here.

Find out more about the CARES Act.

Now let’s talk a little bit about estimated taxes. Is there anything special that people need to know or do here?

Pearce: Most often, self-employed people need to pay quarterly installments of estimated tax. 

Similarly, investors, retirees and others often need to make these payments. That’s because a substantial portion of their income is not subject to withholding. 

Other income generally not subject to withholding includes interest, dividends, capital gains, alimony and rental income. 

The first and second quarter estimated tax payments normally due April 15 and June 15 are postponed to July 15. 

If you are in business for yourself, Form 1040-ES, Estimated Tax for Individuals, includes instructions to help you figure your estimated taxes.

Still got questions? Contact your tax professional or reach out to the United Way for help.

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