- Individual taxpayers can defer up to $1 million in tax payments for 90 days beyond April 15
- C-corporation taxpayers can defer up to $10 million in tax payments for that same period
- The April 15th tax filing deadline has not yet been extended
- The payment deferral may result in significant payments due in June/July when considering 2020 estimated tax payments due at that same time
- Many states have followed suit, and we currently anticipate Georgia will follow the federal deferral
- Your Windham Brannon tax advisor will work with you to develop a plan on filing or extending your 2019 tax returns, based on your individual circumstances.
On Tuesday, March 16, United States Secretary of the Treasury Steven Mnuchin announced that individuals can defer up to $1 million in tax payments to the IRS for 90 days beyond the April 15 deadline as a result of the coronavirus pandemic.
Corporations can defer up to $10 million in tax payments. The $1 million individual threshold was apparently chosen in order to account for pass-through business owners that pay tax on that income through their own personal tax returns. The deferral would occur on an interest-free, penalty-free basis.
What does this mean for you?
As of right now, the April 15 tax return deadline has not yet been extended. Taxpayers just have more time to pay if they owe. As a firm, we will continue to work hard on your behalf to prepare your tax returns as we normally would. However, we understand individual circumstances may vary and will provide you the flexibility to file your returns or extend as necessary.
If you anticipate owing tax with your 2019 tax returns and have not traditionally extended your tax returns in the past, this is a good time to consider doing so. Since taxpayers under the threshold now have an additional 90 days to pay, we can extend your returns by April 15th and then prepare and file within the 90-day time period so that the payments will be made timely.
We presume that this 90-day deferral will include 2020 first quarter estimated tax payments also due by April 15, although there has not yet been mention of that specifically, as long as the total deferred amount does not exceed the thresholds above. However, keep in mind that if you take advantage of this 90-day extension, you will potentially incur three significant cash outflows – your 2019 tax return payment, and your 2020 first and second quarter estimated tax payments – in the June to July timeframe. Therefore, we will assist you in determining the amounts of those payments so that you can plan your cash flow accordingly.
Secretary Mnuchin encourages taxpayers to still file by April 15. He believes that many Americans will be entitled to refunds (about 70 percent per his estimate) and will want those refunds timely, especially now.
Many states are following suit and have already provided for an extension of time to file and pay. More states will most likely follow. We currently anticipate that Georgia will follow the Federal payment extension.
Once the Treasury has issued its official press release to provide further clarification, we will continue to keep you updated.
As always, stay safe and let your Windham Brannon representative know how we can assist you during this time.