Due to deteriorating economic conditions, the IRS has delayed the deadline to file and pay 2019 income taxes and pay 2020 estimated taxes. (IRS Notice 2020-18.) This news should come as a relief to the millions of self-employed who don’t have taxes withheld from their pay and often owe money to the IRS.
90-day delay
Your 2019 income tax return is now due July 15, 2020. This extension gives you an additional 90 days to file your 2019 return and pay any amount you owe on your 2019 taxes.
The delay affects all taxpayers. Thus, it applies if you’re a sole proprietor, owner of an LLC, partner in a partnership, or shareholder of an S corporation. It also applies to C corporations, trusts, estates, and nonprofits.
You can still file an extension
The 90-day delay is automatic—you need not file a tax form to obtain it. However, you still have the option of getting an extension of time to file your 2019 tax return.
All you have to do is file IRS Form 4868, Application For Automatic Extension of Time To File U.S. Individual Tax Return. You’ll receive an automatic six-month extension of time to file your full 2019 tax return.
Thus, your return is due October 15, 2020. But, you must pay any amount you owe by July 15.
Form 4868 is relatively simple and much easier to complete than your full tax return. But you must provide on the form:
- An estimate of your total 2019 tax liability
- The amount of 2019 taxes you’ve already paid
- And the amount you owe
You can send in Form 4868 to the IRS electronically with tax software such as TurboTax or H&R Block, or by your tax preparer.
You can also complete the form online, print it out and postal mail it to the IRS. Your extension letter must get postmarked by April 15. It doesn’t matter if received by the IRS after that date.
What about self-employment taxes?
If you’re self-employed, you need to pay self-employment taxes in addition to income taxes. These are the Social Security and Medicare taxes that the self-employed pay. You pay them to the IRS along with your income taxes.
The self-employment taxes combine for a 15.3% tax up to an annual ceiling. For many self-employed, their self-employment taxes are larger than their income taxes.
Fortunately, the 90-day delay applies to your self-employment taxes as well as income taxes.
What about estimated taxes?
If you’re self-employed, you ordinarily must pay your income and self-employment taxes to the IRS in advance by making estimated tax payments. These are due four times per year. The first estimated tax payment for 2020 is due April 15.
The April 15 estimated tax payment is delayed by 90 days as well. Thus, you need not pay it until July 15.
The second estimated tax payment for 2020 is due June 15; this payment was not delayed. The odd result is that the second 2019 estimated tax payment now comes before the first. Of course, this due date could change.
What about other tax filings?
The 90-day delay applies only to 2019 income taxes and the first 2020 estimated tax payment. It does not apply to any other type of tax filing. Other taxes, such as payroll and excise, are still due.
What about state taxes
Forty-two states and the District of Columbia have their own income taxes. The tax payment and filing dates in almost all of these states fall on April 15. Many states have already extended their deadlines, and more are likely to follow suit.
Check your state tax agency’s website to determine what’s going on with its filing deadline. You can find links to all state tax agency websites at the IRS State Government Websites page.
What if you’re owed a refund?
If you overpaid your 2019 taxes, the IRS owes you a refund. In this event, you should not delay filing your complete tax return. You won’t receive your refund until you file your full return.
If you’re not sure a refund is due, ask your tax preparer or use tax preparation software to determine if you paid too much.
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