In response to the impact of the coronavirus, the IRS postponed both the federal filing and payment deadlines from the traditional “Tax Day” of April 15 to July 15, 2020. Sounds like good news—but how do you actually take advantage of the delayed tax deadline?

The filing part is easy; there is nothing for you to do. The deadline is automatically postponed, so filing an extension request (form 4868) isn’t necessary. Delaying payment, however, is a bit more complicated and depends on your situation.

Delaying Payment if You Haven’t Filed Taxes Yet

Whether you’re preparing your own taxes or using a professional tax preparer, most tax software programs won’t automatically default to the postponed July date. That’s why you (or your preparer) need to be proactive about changing the payment date to July 15.

Delaying Payment if You Have Already Filed Taxes

There are a couple different options here, depending on your situation.

If you scheduled a payment as part of filing your tax return by authorizing a withdrawal electronically, you can cancel your payment by contacting the U.S. Treasury Financial Agent at 888-353-4537. The sooner you make this call, the better, since the payment cancellation request must be done no later than 11:59 p.m. ET two business days prior to the scheduled payment date (for example, an April 15th scheduled withdrawal would need to be canceled by April 13 at 11:59 p.m.). This is an automated cancellation that can be done with a touchtone phone, so you will not need to talk to a person, but you will need the following information to process the cancellation:

  • Social Security number
  • Payment amount in dollars and cents
  • The bank account number scheduled for the withdrawal

If you paid by check that has not processed by the IRS yet, you may be able to call your bank and stop the check. Unfortunately, if you paid by check and it’s already been processed, you can’t undo it.

Impact on State Taxes

Many states have adopted similar rules with regard to the postponement of filing and payment deadlines. As of April 2, 2020 the following 38 states have followed the federal government in changing filing/payment deadlines to July 15: AL, AR, AZ, CA, CO, CT, DC, DE, GA, IL, IN, KS, KY, LA, MA, ME, MD, MI, MN, MO, MT, NC, ND, NE, NJ, NM, NY, OH, OK, OR, PA, RI, SC, TN UT, WI, WV.

Additionally, the following states and territories have changed their filing and payment deadline to a different date:

  • Hawaii: July 20
  • Iowa: July 31
  • Idaho: June 15
  • Mississippi: May 15
  • New Hampshire: June 15
  • Oregon: April 30
  • Virginia: June 1
  • Washington: June 15
  • Puerto Rico: June 15

Please visit your state’s department of revenue for further guidance on the ability to cancel any automatically scheduled state tax payments.

Delaying payment when you have a small balance due is probably not worth the hassle—pay it off and move on with life. But if you have a large balance due, delaying payment can provide greater cash flow flexibility and perhaps provide an opportunity to earn a little interest on the money. Just beware of aggressively investing these funds since the tax balance due won’t go away; it’s still a short-term liability due on July 15, 2020.

 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Brian Vnak

Brian Vnak

Vice President, Advisory Services

CFP®, CPA, Series 7 Securities Registration,1Series 66 Advisory Registration,† Insurance License Brian diligently advises clients on income, gift, trust and estate tax issues while leveraging the expertise of the Roundtable to deliver comprehensive, customized strategies. For more than 10 years he has helped numerous clients develop and implement sophisticated financial, tax and estate strategies that are in alignment with their goals and values. Brian is a...Read More