In response to the extreme societal disruption caused by the COVID-19 pandemic, the Internal Revenue Service announced on March 18 that it was extending the tax payment deadline from April 15 to July 15. In a follow-up social media announcement, it confirmed that taxpayers and businesses would have until this new deadline to file their tax returns as well as pay any outstanding bills.
For those who haven't yet filed their taxes, that raises the question: Should you file your tax return now, or should you take advantage of this extra time and wait to file your return until July? The answer depends largely on whether you expect a tax refund or not.
File now if you expect a refund
There's no reason to delay filing your taxes if you expect to get money back from the government. In fact, in this case, it's best to file as quickly as possible so you can get your refund check sooner. The extra money could be a lifeline for you and your family through these difficult weeks, as many businesses remain closed to slow the spread of COVID-19.
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Even if you aren't required to file a tax return because your earned income was below the standard deduction for your tax filing status, it could make sense to do so if you believe you'll qualify for refundable tax credits, like the Earned Income Tax Credit (EITC) for low-income Americans. Refundable tax credits can reduce your tax bill below zero: If you don't owe any taxes and you qualify for a refundable credit, that credit amount will come back to you as a refund. But filing your tax return is the only way to get this extra money. The government isn't going to hunt you down to give you the money it owes you, especially now when it has much bigger problems.
Consider delaying if you expect to owe money
If you expect to owe money to the government, you might be better off postponing paying your taxes until closer to the new July deadline. But you don't have to put off filing. You can file your taxes at any time, then wait to pay your bill until the July 15 deadline. If you have bigger concerns right now, you can always wait to file your return.
Those who are concerned about their ability to pay, even by July 15, due to COVID-19 job loss should contact the IRS to discuss their options. The IRS offers several payment plans to help taxpayers pay their bills over time. Its short-term plans give you up to 120 days to pay what you owe, while its long-term plans enable you to pay back your bill in installments over many months. You can also make an offer-in-compromise where you tell the IRS what you are able to pay and if it agrees, you're off the hook for the rest of your tax bill.
The July 15 tax extension takes a lot of pressure off of those expecting to owe money to the government, but for the millions of Americans expecting refunds, there's no benefit to procrastination. Claim your refund today so you can rely upon this cash to support yourself and your family during this difficult time.
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