For Those Who Can, Ignore the Tax Deadline Extension
President Trump said in an address last week that the Internal Revenue Service would extend the federal tax filing deadline. But filing before April 15 could mean increased security and decreased fees.
(TNS) — During his Oval Office address last week to address the nation’s coronavirus concerns, President Donald Trump said the Internal Revenue Service (IRS) will extend the April 15, 2020 federal income tax filing deadline.
The IRS has not yet announced a new date, and it’s not yet clear if the new deadline will apply to all taxpayers.
Tax experts expect the new date to be somewhere between June 15 and October 15.
But is waiting to file your taxes a good idea?
But first, will New Jersey change its deadline?
New Jersey typically mirrors the IRS when it comes to filing extensions, said Treasury spokeswoman Jennifer Sciortino.
“We are monitoring their actions closely right now, as well as the circumstances evolving in New Jersey,” she said.
If you have the option to delay filing your return, it might be in your best interest to file anyway.
Gail Rosen, a Martinsville-based certified public accountant, said she thinks extending the deadline is a good idea, but she’s still telling her clients to continue to act like the deadline won’t move.
“Even if they have time to pay their taxes, it is important to know where you stand for 2019 and what you should be doing for 2020,” Rosen said.
Protect Yourself From Scammers
It’s a common IRS scam for fraudsters to file a fake tax return in someone else’s name and Social Security number. They create a return that will yield a healthy refund.
If a scammer files in your name before you do, you’re going to have big problems. Not only will you have to prove your identity, if you’re due a refund, it could take a very long time before the mess is cleaned up and you get your money.
There are other reasons the IRS could reject your return if you delay filing too long, said Bernie Kiely, a certified financial planner and certified public accountant with Kiely Capital Management in Morristown.
For example, if you’re divorce and you’re supposed to claim a deduction for a child, but if your ex files first and takes the deduction, the return could be rejected.
It could also happen if you claim your child, but the child later files his or her own return.
“In either case, the person who files first wins,” Kiely said. “The second return will be electronically rejected.”
If someone uses your Social Security number either intentionally or by accident and they file before you, your return will be rejected.
But Jonathan Donenfeld, a certified public accountant with JLD Tax & Accounting in Jersey City, said rushing your return is a bad idea.
“The most important thing is for it to be done correctly,” Donenfled said. “We see people rush to file and they end up not having all of their documents.”
Those worried about identity theft can take extra steps with the IRS to protect their returns.
Scammers May Step It Up
Scammers historically take advantage of news events to try to trick consumers.
Expect coronavirus scammers to be no different. A move to the filing deadline will be a new opportunity for the bad guys.
“The likelihood of this always increases when scammers feel they can prey on people’s emotions or in this case, their fears,” said Howard Hook, a certified financial planner and certified public accountant with EKS Associates in Princeton. “People need to know the method used by the IRS to communicate with taxpayer’s has not changed because of this.”
The IRS will never call you about your tax situation. Instead, it would start a conversation with a letter.
But that won’t stop the scammers from giving it a try.
Expect callers to tell you they’re the IRS, and you’re in trouble because you didn’t file your taxes on time, or that you owe money (and they want you to pay via gift card) otherwise there will be a warrant for your arrest.
If anyone calls and says they work for the IRS, even if the Caller ID says the call is coming from Washington, D.C. or the agency, just hang up.
“The IRS only will call you if you are under audit or your account is in collections and you would have received a series of letters first,” Donenfeld said. “If you are unsure you should contact a tax resolution specialist and they can check your account for you to make sure you don't have IRS issues.”
Or you can contact the IRS yourself.
Advantages To Filing Later
Right now, until the IRS announces a new filing deadline, you can still get an extension to file your return.
But that doesn’t give you an extension to pay any taxes you owe.
“If you don't pay by April 15, interest and penalties start accruing,” Donenfeld said. “The IRS would have to waive those penalties to make it worth while to wait.”
If you’re feeling a financial crunch because you don’t have paid sick time that will help if you need to stay home because of coronavirus, delaying paying your tax bill might be tempting.
A delay in paying taxes would help if you owe the IRS and give you one less bill to worry about — for now.
“But someone who owes say $500 in taxes should not now go out and spend that money just because there is a delay in filing for one month,” Hook said. “That is not a stimulus as far as I am concerned. It may help for people who may be out of work or paid hourly who have seen their wages go down.”
But if you’re due a refund, why let the government get an interest-free loan for longer than necessary?
“We are finding that most of our clients adjusted their withholding and as a result, their 2019 taxes have more refunds than last year,” Rosen said. “Another incentive to file earlier for 2020.”
What Will It Mean For The Economy
New Jersey’s fiscal health is always a hot topic of conversation around the state.
So will it be harder for the state to get its tax revenue on delay?
The Treasury Department said it’s projecting 23% of annual gross income tax receipts will come in April. For context, In April of 2019 the gross income tax collected $3.627 billion, or 23% of the annual total, Treasury’s Sciortino said.
“The state has dealt with filing extensions in the past and our team of professionals will adjust accordingly, if needed,” she said. “This is yet another reason why we have been focusing on building a healthier surplus than the state was typically accustomed to for many years.”
Not everyone filing tax returns will owe money, though.
“It is important to remember that there will be taxpayers who are getting refunds who may delay filing as well due to concerns over going out or just not wanting to deal with taxes,” Hook said.
That could mean relief for the state and federal governments not having to pay refunds out sooner.
Taxpayers can check the Division of Taxation’s website for updates on whether the filing deadline is changed.
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