The Coronavirus pandemic has caused uncertainty around the world. Many business owners find taxes overwhelming and confusing in the best of circumstances and worry that Covid-19 may muddy already-murky waters when it comes to tax season. 

It’s true that there have been new developments regarding filing your taxes. To simplify the process, we’ve compiled a list of the must-knows of how Covid-19 affects your federal taxes. 

Filing Deadline Extension

The IRS has extended the federal tax filing deadline from April 15 to July 15, 2020. The extension applies automatically, meaning you don’t need to file for an extension as long as you file your taxes before the new deadline.

With this extended deadline comes more time to contribute to your IRA, and often more time to pay state taxes. However, not all states are moving to the same extended schedule as the federal government, so it’s important to check the deadline for your state. The extended deadline also applies to the first-and second-quarter estimated income tax payments; you don’t need to make these payments until July 15.

After the July 15 deadline, if you owe taxes that you can’t pay, you’ll need to file for an extension or work with the IRS to establish a manageable payment plan. Filing after the deadline can result in additional fees and penalties.

Keep in mind that it may still be in your best interest to file your taxes before July 15. The IRS will continue to process refunds like normal, meaning the earlier you file your taxes, the sooner you could get that much-needed check if you qualify. The IRS usually issues refunds within three weeks through direct deposit.

Federal Stimulus Packages

The federal government has passed three economic relief packages aimed at supporting small businesses that have suffered losses due to the Coronavirus. Over $376 billion has been allocated toward helping small businesses retain their employees and stay afloat.

This includes the CARES Act, which supports small businesses through the Paycheck Protection Program. Small businesses can apply for funds to cover up to eight weeks of payroll or pay interest on mortgage, rent, and utilities.

Individuals may be entitled to a stimulus check from the federal government. Eligible taxpayers can expect a direct deposit of $1,200 with an extra $500 for each dependent child up to age 17. This payment is considered an advance on your 2020 tax credits, which won’t need to be repaid but will be subtracted from your 2020 tax refund.

What Next?

The Coronavirus situation is still evolving, and the federal government will likely continue to look for more ways to mitigate its economic effects. There might be future changes to your taxes, but we’ve got you covered with the latest updates and free information regarding Covid-19 effects on your financial bottom line.

One thing that hasn’t changed is that we’re here to support your tax planning and preparation with more personal advice and direction. If you’re looking for a tax accountant or tax agent, contact Caro & Associates at (206)-497-0671 for a no-obligation consultation.