Amid the coronavirus outbreak, both the federal government and North Carolina are extending income tax deadlines.
Here is a breakdown of some key things to know.
Changing Tax Deadlines
The Trump White House announced in March that they are pushing back tax day by three months to July 15. You can defer income tax payments up until that time without penalty or interest. The extension is automatic and does not require additional paperwork.
North Carolina is following suit, extending the deadline for state income taxes to the same day. More details on that change can be found here.
The nationwide move, in particular, is a bit unusual, according to Carolina Bruckner, the managing director of the Kogod Tax Policy Center at American University.
“It’s not uncommon for [the U.S.] Treasury and IRS to issue a delay for local or regional areas, communities impacted by natural disasters and delay those tax filing deadlines,” Bruckner said. “What’s unique here is that it’s been done carte blanche for the entire country.”
Should You Take Advantage of the Extension?
Bruckner says if you do not need to wait to file, don’t. Instead, file as soon as you can. She points to two key reasons.
First, she says about three out of four taxpayers are expected to receive a refund this tax season. The sooner you file, the sooner you may get access to that money, which could be helpful to those cash-strapped as a result of the virus-induced shutdown.
“That refund check is going to be a source of income to help most taxpayers as they struggle with the economic catastrophe that the pandemic is triggering,” she said.
The second reason: the federal coronavirus relief checks.
Bruckner says you want to make sure the IRS has your most up-to-date information, including your direct deposit details and information about any dependents.
“The way that they’re going to be paid out is, first and foremost, predicated upon your 2019 return, that’s going to have your direct deposit information on it. And if you haven’t filed your 2019 return, they’re going to look at your 2018 return,” she said.
What Do I Need to Do To Get The Coronavirus Relief Check?
The IRS says most people do not need to take additional action in order to receive the payment. If you have filed a tax return and meet the income qualifications for the check, the federal government will send you the payment either via check or direct deposit (much like if you received a tax refund).
The IRS says they are developing a web portal where you can submit your banking information if the IRS does not already have it. That way, the payments can be deposited directly rather than sent by mail, a process that can take extra time.
Earlier this week, the IRS said that anyone who does not typically file a tax return – like some low-income workers – should fill out an abbreviated return this year, so the federal government has your latest information on file to send you the payment.
Then on Wednesday, the U.S. Treasury walked part of that back, saying that Social Security recipients who do not typically file a return will automatically receive the payment either by mail or direct deposit, without having to fill out a return. Several members of Congress raised concerns that requiring extra paperwork put an unnecessary burden on seniors.
However, the IRS notes that because they do not have any information on file about dependents for this group of Social Security recipients, they will not receive more than the $1,200 payment per person at this time.
The IRS is frequently updating its guidelines on these checks. Find the latest details here.
What if I Need an Even Longer Extension For Filing My Taxes?
You can request an extension beyond July 15 at the federal level. To do so, you have to file a Form 4868.
Businesses must file Form 7004.
Other Deadlines Also Extended
The deadline for making contributions to IRAs and Health Savings Accounts as part of the 2019 tax year has also been extended through July 15.