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Tax Day Rescheduled. The Dos and Don’ts of Procrastination

Updated: Dec 15, 2020

At the end of March, the Internal Revenue Service (IRS) gave Americans an extra three months to file and pay their taxes. The new deadline is July 15, 2020.[1]

With extra time, many Americans are still asking themselves when they should file their 2019 return. While procrastination would normally land you in hot water with the IRS and cost you money in penalties and interest, postponing your tax liability may be in your best interest this time around.

To file now or to file later?

DO File Now: If you are owed a refund, you should file quickly to get your money. In these uncertain times, ensure that your refund is made available to you as soon as possible by selecting direct deposit. Refunds made by check can take as long as six to eight weeks to get to you, whereas direct deposits can arrive in your bank account within ten business days.

A substantial amount of news around filing now deals with your eligibility to receive an economic impact payment. By now, if you have not filed your 2019 return, the IRS based your eligibility on your 2018 return.

If your situation changed in 2019 and made you eligible to receive a payment – for example, you could no longer be claimed as a dependent or your adjusted gross income decreased below the threshold (see IRS Economic Impact Payment Information Center for more information on these income thresholds and to answer additional questions) – then you should expect to see a bigger refund (or offset to your tax liability) in April 2021 when you file your 2020 return.

Are you confused yet? Hopefully the IRS will send more clarification on the matter of receiving stimulus money in your 2020 Tax Return in the coming months.

DON’T File Later but DO Pay Later: If you owe money for 2019, you likely welcomed the news of the new filing deadline. The government gave you more time to pay them, which benefits many Americans who are currently unemployed or suffering other economic hardship.

While you may owe money, you should still consider filing your tax return soon so the chore is no longer hanging over your head. One of the benefits the IRS allows is that even when you owe money, you can schedule a payment date, even on the last possible day, in this case July 15th. If you file now, you will have two months to save the money to pay your tax liability. You can also create an account to apply for a short-term payment plan where you pay the amount due within 120 days. More information and the application can be found at IRS Apply Online for a Payment Plan. You receive immediate notification about the status of your application.

Understanding when to file and how best to pay a tax liability can be a tough process to navigate. Consider reaching out to a tax professional, such as those at Quill & Keyboard Accounting, to help you with filing your return and preparing for a potential tax liability.

[1] The deadline as of May 11, 2020. The government has considered extending the deadline once again but no new date has been set at this time.

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