This is a rapidly changing topic. Please look back for updates. Last Updated 04/06/20:
As the coronavirus continues to spread, and governments respond, it is becoming more and more clear that this will have an impact on our daily lives. Businesses are closing their doors, people are staying home, and hospitals continue to bravely assist those impacted to the best of their ability. During these times many are focused on keeping their loved ones safe, and the last thing on your mind is probably taxes. If you haven’t been focusing on your taxes, you may be in luck. As of 03/20/20 the IRS extended the tax filing deadline. Here's what this may mean for you, and how this may impact your 2019 tax return.
Tax filing deadline extended
If the April 15th deadline has been looming over your head, the IRS just announced that the new deadline will be July 15th. This is an additional 3 months to not only file your return, but also to make your first quarter's estimated tax payment, if that applies to you. If you owed taxes for 2019, you will have an additional few months to pay it without being penalized or owing interest for those months after April 15th.
What does this mean for those who normally file an extension for October 15th instead? At this point it is unclear. As of this posting there has been no news as to whether this deadline has also been extended. Also, it is unclear how this will impact the second quarter's estimated tax payment, which is typically due on June 15th.
What about prior year IRA contributions?
Although 2019 has come and gone, there are still tax moves that can be made before the tax filing deadline. One of the more common moves is to make an IRA or Roth contribution for the prior year, depending on what your income is. The IRS language regarding this is that a contribution must be made by the tax filing deadline (excluding extensions). The IRS has confirmed that this applies for the extension as well. For those who haven’t made a prior year contribution yet and would like to, they have until the July 15th deadline now.
What about my state tax return (NH &MA)?
State taxes are another important part of the tax filing season. For those that live or work in Massachusetts they know this all too well. Believe it or not, New Hampshire also has an income tax, but only on dividends and interest over a certain amount. Do these changes also impact state tax returns? Not necessarily. Each state has their own rules regarding taxes and just because the Federal deadline has been extended does not mean state returns are too. This may lead to a scenario where a state return needs to be filed, while the Federal can be delayed.
This is a fluid situation, and states will be updating their taxpayers on their changes as well. For those who need to file a return in NH or MA here is what we know so far:
As of March 30th, New Hampshire is extending the filing deadline until June 15th for the vast majority of New Hampshire taxpayers. Most New Hampshire taxpayers do not file an interest and dividend return, but if you owed less than $10,000 in 2018, your filing deadline is extended to June 15th. If you’re lucky enough to have owed over $10,000 of tax on your interest and dividends from your investments in 2018 your filing deadline is still April 15th if an extension is not filed.
In either case, the deadline is still before the Federal deadline of July 15h. Keep this in mind if you do need to file a NH tax return. If you make estimated tax payments for New Hampshire, both your Q1 and Q2 payments are due on June 15th as well. For more information you can follow the NH Department of Revenue page and review their latest press release outlining these changes. Please note that in order to qualify for this extension and avoid penalties, you still need to have paid in at least 100% of the tax you owed for 2018 for 2019 (and for 2020 estimated taxes).
Unlike NH, MA has issued some guidance and relief for taxpayers and the filing of your 2019 return. The MA Department of Revenue mentions that they will work with taxpayers to waive penalties under certain circumstances. They also mention that if the IRS provides relief to taxpayers, they would offer similar relief. This suggests that with the Federal tax deadline extended, this would also apply to MA. For the most up to date information regarding the MA tax filing information in response to the coronavirus, you can follow this link.
Tax filing in 2019 will be interesting to say the least. The Federal government, and many states, are making changes to try and provide relief to taxpayers. This is a rapidly developing situation with more changes and guidance to come. For the most up to date information you can visit the IRS page for coronavirus tax relief.
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