You’ll now have an extra 90 days, until July 15, to file and pay your federal income taxes.
You are still allowed to file for an extension until October 15, just as you can during any other year. To do that, you have to file the extension form by April 15.
The changes have rolled out over the course of the week. The White House first announced changes on Tuesday. Then Treasury Secretary Steven Mnuchin said on CNBC Wednesday that the IRS would not be extending the April 15 filing deadline but would allow filers extra time to pay. Finally, Mnuchin announced via Twitter on Friday that the deadline to both file and pay taxes will be July 15.
He added, in a subsequent tweet, “I encourage all taxpayers who may have tax refunds to file now to get your money.”
The delay is a rare but not unprecedented move by the IRS. Some regions affected by a 2007 nor’easter were allowed to pay their taxes as late as June of that year.
Mnuchin estimates the delay will free up $300 billion to help individuals and businesses that might otherwise have trouble with cash flow issues brought about by the economic impact of the coronavirus.
Here’s what to keep in mind as you figure out how and when you should file your taxes.
It’s still smart to file ASAP
If you don’t owe money to the IRS and are expecting a refund, then you still have an incentive to file your taxes as soon as possible.
“We encourage those Americans who can file their taxes to continue to file their taxes on April 15,” Mnuchin announced at a press conference onTuesday.“Because for many Americans, you will get tax refunds.”
The average refund, as of March 6, is $3,012, according to the IRS. That kind of money can help pad or start your emergency fund.
Already, 18% of nonretired American workers had lost their jobs or had their hours reduced because of coronavirus-related disruptions, according to a survey released Tuesday by NPR, PBS NewsHour, and Marist. An emergency fund is the first place experts suggest you turn for cash.
If it turns out you owe the IRS money, filing early can also give you more time to get the funds together.
This change is particularly “beneficial ... for those who know they owe and still have not set aside enough cash flow to pay that tax bill by what would have been the original due date of April 15,” says Lazetta Rainey-Braxton, co-CEO of New York-based financial planning firm 2050 Wealth Partners.
Don’t assume the delay applies to your state return
Mnuchin’s announcement only applies to your federal return, which means you should check to see if your state returns are still due when they would normally be. Multiple states, but not all, had pushed back their deadlines as of Friday.
California has extended filing and payment deadlines to July 15 for businesses and individuals, while Colorado, Connecticut, Indiana, Maryland, Michigan, and Ohio previously agreed to align their deadlines with any delay announced by the IRS.
As the coronavirus continues to upend daily life, additional states may make changes. For up-to-date information, check the State Tax Filing Guidance Chart from the American Institute of Certified Public Accountants. It tracks every state’s deadlines and coronavirus-related relief provisions and updates them frequently online.
If you want to file closer to July or get an extension
Many accountants and tax prep firms depend on temporary workers to prepare the glut of tax returns that come in during March and April. If you’re filing after April, it’s important to remember that it may be harder to get help: Firms may not have enough workers, or your CPA may not have enough bandwidth, to do returns.
“You better make sure that they want to work till July because most of them, they are exhausted from a very intense tax season from January to April,” says Braxton. “They have to manage the capacity for being able to hire because they may have seasonal employees as well.”
That said, you may have options. H&R Block, for example, released an online guide to the delay, noting that they “will be standing ready to help — no matter how you choose to file” during the extension period.
This story first appeared on CNBC's GROW. More from CNBC:
