Optimized Tax

Hidden April 15 – July 15 Tax Deadline Implications

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elementscpa-other-april-15-july-15-tax-deadline-implicationsMoving the April 15 tax deadline to July 15 seems simple enough, but there’s a number of hidden implications to consider that could either work to your advantage or catch you off-guard. Read below for those that may impact you. (Last updated 1 Jun 2020 10:16 ET)

 

IRS – Federal Implications for April 15 / July 15

First off, the basics: For the first time in history, the IRS has moved the April 15 tax deadline to July 15. This means that all individual and C-corporation tax returns normally due on April 15 can be filed and paid by July 15 without submitting any extensions and they’ll avoid any late filing or late payment penalties. Simple enough, right?

But wait, there’s more:

  • 1q/2q 2020 estimated tax payments — If you pay quarterly estimated taxes, the first quarter 2020 payment which is also normally due April 15 has also been moved to July 15. And effective April 9, the 2nd quarter 2020 payment (originally due June 15) has also been pushed to July 15 as well. (Both quarters now due at same time.)
  • 2020 “economic impact payments” — The 2020 economic impact payments will be issued using your 2019 return figures if filed, or your 2018 return figures if not — the IRS hasn’t announced an official ‘cut-off date’ for making the determination but the first wave of payments appears to have begun the week of April 13. This can lead to a few different scenarios: (a) Your income/dependents are roughly comparable between the two years and it doesn’t matter since the payment would be the same, (b) Your income is in/near the phase-out zone and will increase in 2019 (or your dependents will decrease), so better to wait to file and let the IRS use your 2018 figures (getting a higher payment that won’t have to be later repaid), or (c) Your income is in/near the phase-out zone and will decrease in 2019 (or your dependents will increase), so depending on the 2019 refund/balance due implications, you may want to file before the IRS pulls its numbers to calculate your recovery payment (no cut-off date has been identified currently). For scenario (c), know that in any event you would still qualify for the additional amount when you go to file your 2020 tax return.
  • Full extensions still needed for September 15/October 15 — Some folks are used to extending and filing later anyways – if that’s you, remember you still need to file an extension form by July 15 if you’re wanting to get the full extension period to October 15 for personal returns or September 15 for C-corp returns. (Note: S-corp and Partnership returns needed to file extensions by their original March 15 due date to extend to September 15.)
  • 2019 IRA/ HSA/ MSA contributions — Normally these are required to be paid by April 15, but now they can be made by July 15 instead and still count.
  • 2016 tax returns — Normally any refunds for 2016 returns would expire April 15, but per April 9 announcement they appear extended. (Be careful of state implications however.)
  • March 15 and May 15 tax deadlines — The 2019 S-corp and Partnership tax deadline is normally March 15: it was not postponed by the IRS. The 2019 exempt organization original deadline is normally May 15: it was automatically postponed to July 15 per the April 9 IRS release.

 

State Implications for April 15 / July 15

Another unintended kicker is state — the IRS can only set rules for federal tax obligations, and each state has to decide what they’re going to do. Which can be a mess as you might imagine.

We’re not going to cover all 50 states+ below, but here’s a comprehensive list the AICPA is keeping of state level implications (and Elements CPA Members can contact us directly for any clarifications you may need):

  • Maryland — Postponed the filing and payment deadline for April 15 returns to July 15 in alignment with the IRS. Also postponed 1st quarter and 2nd quarter 2020 estimated tax payments to July 15.
  • District of Columbia — Postponed the filing and payment deadline for April 15 returns to July 15 in alignment with the IRS. Quizzically, did not postpone the 1st quarter 2020 estimated date — it remains April 15 (and 2nd quarter 2020 remains June 15).
  • Virginia — Did not postpone the filing date from the normal May 1 (always been different date from IRS), as of April 22 postponed late payment interest to June 1 (was previously set to begin May 1), and did postpone late payment penalty if paid by June 1. However, if payment not made by June 1, late payment penalty applies retroactively to the original May 1 deadline. (Note: Virginia automatically grants extensions for any returns not received by the due date.) Postponed 1st quarter 2020 estimateds to June 1, but 2nd quarter 2020 remains June 15.
  • Aligned with the IRS — Here’s a partial list of additional states that have aligned with the new IRS date of July 15 for both 2019 taxes and payments and for 1st quarter 2020 estimated payments: CA, CO, GA, NY, PA, and MA. Be sure to checkout your state’s tax department website and the AICPA list linked above for the latest on all 50 states and additional jurisdictions.
  • States still charging interest from April 15 — For various (and perplexing) reasons, a few states/jurisdictions are still charging interest: KY, NC, NE, and NYC. Scroll to the bottom of this ProConnect post for details.

 

Non-Income Tax Implications

In addition to regular ol’ tax returns, there’s also other business filings that happen on and around April 15, with some moving and some not. Here’s some highlights:

  • Maryland Annual Report/Personal Property Returns — Normally due April 15 to the SDAT, these have been automatically extended to July 15 for all entities. (Note: If ‘reviving’ an entity or other special procedure, we highly recommend submitting online as many of the state centers are closed and not processing mail.)
  • Maryland Sales, Withholding, Fuel — February, March, April and May due dates have been postponed to July 15.
  • DC Biennial Returns — Due every two years for every registered business in DC, these forms are sually due April 1 but have been postponed to June 1.

Of course there’s plenty more – be sure to confirm on the related agency’s website and ElementsCPA members can reach out directly to us to inquire.

 

Making the Right Moves

So as you might expect, tax can be complicated — but now you know and can make the proper moves that work for you.

We’ll be updating this post as we identify changes, and be sure to subscribe to our Insights Blog if you’d like to get a note when new posts are available.