1. When do Americans have to pay their taxes?
The Treasury Department is giving individuals and corporations an additional three months -- until July 15 -- to file their returns and pay their tax bills. The government is hoping that this will help companies and people who could be facing a short-term cash flow shortage get through the coming weeks until it’s safe to resume normal economic activity. There also was concern that it could be difficult or unsafe for people to met with their tax preparer before April 15 while most schools and many businesses are shut down to prevent the spread of the virus.
2. Does this apply to state tax returns as well?
Not uniformly. Several states, including Maryland, California, Connecticut and Oregon have delayed some deadlines, giving taxpayers more time to submit the paperwork and come up with the cash. Other states are still formulating their plans and deadlines. The American Institute of Certified Public Accountants is keeping a running list of state and city tax deadline extensions.
3. Can I get an extension?
In a normal year, the Internal Revenue Service will atomatically grant a six-month filing extension, no questions asked, giving Americans until October 15 to file their returns. But the extension does not apply to the money owed, so interest and penalties accrue once the payment deadline -- April 15 normally -- passes. Whether extensions will be so leniently granted this year, and how long they’d be for, are still to be determined. Last year, a record 15 million taxpayers requested the six-month filing extension. Accountants had expected that even more would request one this year.
4. What will this mean for the U.S. economy?
Treasury Secretary Steven Mnuchin estimates that the payment delay will inject about $300 billion in liquidity into the economy as individuals (wealthy ones, generally speaking) and companies keep their money longer. Most middle- and lower-income people don’t owe a tax bill -- they get a refund instead. They can, and usually do, file early in the tax season to get their hands on their refund checks as quickly as possible.
5. Will tax refunds be delayed?
Though the IRS is cutting staff in half at some of its processing centers, that shouldn’t have a significant impact on refund timing, according to IRS Commissioner Chuck Rettig. The agency recommends filing as soon as possible, submitting your return electronically and opting to get the refund via direct deposit, rather than by check, to get your refund as quickly as possible. The IRS says the average time to get a refund is three weeks.