ALERT: Updated as of April 10, 2020 — see IR-2020-66 at IRS.gov
In an ongoing series of moves, the IRS and Congress are working to create tax relief for individuals, small businesses, and large corporations impacted by COVID-19.
Here are 3 key IRS moves to help taxpayers.
In an upcoming blog, I’ll describe more about the tax credits for small businesses that must provide certain paid leave related to COVID-19 as well as other coronavirus-related tax changes.
Extension of time to file and pay taxes
The IRS announced that the filing deadline for 2019 income tax returns for individuals and calendar year C corporations, which is normally April 15, has been extended to July 15, 2020. You don’t have to submit a filing extension request; this is automatic. But if you want more time to file beyond July 15, then you do need to submit a filing extension request (Form 4848 for individuals; Form 7004 for corporations). This additional extension gives you until October 15, 2020, to submit 2019 income tax returns for individuals and calendar year C corporations.
The extension also applies to paying income taxes. It applies to 2019 taxes that ordinarily would have been required to be paid by April 15, as well as other payments required April 1, 2020, through July 15, 2020. It also covers 2020 estimated taxes due on April 15 and June 15.
The deferral does not apply to other taxes, such as payroll taxes, which must continue to be deposited as required or become subject to interest and penalties. However, the IRS may be amendable to waiving these penalties because of reasonable cause.
Note: Check your state income tax filing deadlines, which may or may not have changed.
HDHP/HSA relief
Usually a high-deductible health plan (HDHP), which is a prerequisite to funding a health savings account (HSA), cannot cover medical expenses until the deductible under the policy has been exhausted.
However, certain preventive care treatments are excepted from this requirement. And now, the IRS has made it clear that testing and treatment for COVID-19 can be paid without a deductible and won’t disqualify the insurance as an HDHP. This will continue to allow those covered by the HDHP to make deductible contributions to their HSA.
IRS help center
To keep taxpayers up on coronavirus-related tax changes…which seem to be coming fast and furious…the IRS has created a landing page entitled the Coronavirus Tax Relief center. Check back frequently to take note of updates for actions applicable to you.
Final thought
Many, many small businesses taking precautions to keep their employees and customers safe during this pandemic are in for some serious financial problems. Check back for additional financial and tax relief being offered by federal, state, and local authorities.
