The unprecedented fallout from the coronavirus pandemic has meant unprecedented concessions by the U.S. government in a number of respects.
The CARES Act’s $2 trillion stimulus package represents perhaps the largest investment in this regard, but a number of U.S. government agencies have enacted other significant rule changes to help the citizenry get through these challenging times.
Nancy A. Kistner, CFP, is a managing director, wealth strategy executive and head of business strategy for the Bank of America Private Bank Wealth Strategy Group.
She also serves as the wealth strategy division executive for New York and the West Division for the Private Bank headquartered in New York. In addition to leading business strategy for the Wealth Strategy Group in the Private Bank, she directs the efforts of wealth strategists throughout New York City and the West Division, encompassing twelve markets across eight states including Arizona, California, Colorado, Nevada, New York, Oregon, Utah and Washington. She also serves as an executive leader of the Private Bank Onboarding Council, Whole Family Engagement Council and Advisor/Analyst Development Programs.
Justin Peterson is a Deadly Weapons Protection Underwriter at Beazley. He has been with Beazley since 2022.
Rick Hamilton, is senior vice president of AML data science solutions at PNC Bank.
One such rule change is the extension of this year’s April 15 tax deadline until July 15. Importantly, the extension also applies to Americans living abroad who would otherwise generally have a filing deadline of June 15.
The scope of the July 15 extension
When the July 15 extension was first announced in March, the taxpayer community felt a measure of relief combined with a modicum of uncertainty.
The extra time was welcome, but questions remained: Does the extension apply to the obligation to file, or the obligation to pay tax, or both? Does the extension apply to tax forms due on April 15 other than the basic federal income tax return (Form 1040)? Finally, what about estimated taxes? Are those being extended too?
Since the original announcement, the IRS has published several updates to clarify the scope of the July 15 extension.
First, the IRS announced that the extension to July 15 applies both to the obligation to file the tax return and to pay any taxes that are due.
The IRS then clarified that the extension applies to other tax forms that would otherwise be due on April 15. This includes corporate tax returns, estate and gift tax returns, exempt organization returns, as well as international information returns and related schedules.
The broad scope of the extension relief is especially relevant for U.S. citizens living abroad who are often required to file additional forms to report assets and activities outside the United States including, for instance, the Form 3520 to report a foreign trust, the Form 5471 to report a foreign corporation, and the Form 8938 to report foreign financial assets under FATCA.
Finally, the IRS did in fact extend the deadlines for quarterly estimated tax payments due on April 15 (the first payment date) and June 15 (the second payment date) to July 15 as well.
One important caveat for citizens living in the United States is the federal extension to July 15 does not necessarily apply to U.S. state and local filing deadlines. Taxpayers should check with their state tax agencies to verify whether an extension has been granted this year for the particular form obligation.
Further extensions still available
With July 15 a few weeks away, taxpayers still have ample opportunity to file this year’s tax return on time.
As with most years, taxpayers who are unable to file by this year’s deadline can file a request for an extension to Oct. 15, 2020. Understandably, the deadline to file the request itself was moved to July 15. It should be noted that the extension to Oct. 15 is only an extension to file and does not extend the time to pay federal income tax beyond July 15, 2020.
For U.S. citizens living abroad, an even further extension may be granted to Dec. 15 under certain circumstances. A tax professional should be consulted to discuss this extension option.
For more information on the July 15 extension as well as other rule changes in response to the pandemic, the IRS has created a webpage dedicated to this topic at https://www.irs.gov/coronavirus.
