Deferred Tax Deadline: Who Qualifies and How to Apply

If you're facing a tax bill that's more than you can pay by the original deadline, you might be eligible for a deferred tax deadline. This allows you to pay your tax bill in installments over time.

To qualify, you'll need to owe more than $50,000 in taxes, which is a threshold set by the IRS. You'll also need to have a valid reason for not paying your taxes on time, such as experiencing a financial hardship or being unable to pay due to a casualty loss.

The IRS will review your application to determine if you qualify for a deferred tax deadline. This is a complex process, but the IRS will consider factors such as your income, expenses, and assets when making their decision.

The tax filing and payment deadlines have been extended due to the COVID-19 pandemic. The original deadline of April 15, 2020, was automatically extended to July 15, 2020. This means you now have extra time to file your taxes without any additional paperwork or phone calls to the IRS. Individuals and businesses who need more time beyond July 15, 2020, can request a filing extension by submitting Form 4868 (individuals) or Form 7004 (businesses). If you're expecting a refund, it's a good idea to file as soon as possible and consider filing electronically.

To be eligible for the deferred tax deadline, you must be an Affected Taxpayer, which means you have a Federal income tax payment or an income tax return due on April 15, 2020.

All Affected Taxpayers can defer payments due April 15, 2020 until July 15, 2020, without penalties and interest, regardless of the amount owed or the number of filings to be postponed.

Eligible Taxpayers can be anyone with a Federal income tax payment or an income tax return due on April 15, 2020.

This includes people who pay self-employment tax, and the relief applies regardless of the amount owed or the number of filings to be postponed.

If you're an Affected Taxpayer, you can defer payments due April 15, 2020 until July 15, 2020, without penalties and interest.

As an employer, you're now responsible for collecting and paying the deferred taxes. You have a few options to make this process smoother for your employees.

One option is to withhold the amount from employees' paychecks throughout 2021, which will help lessen the hit to their paychecks. This can be a good way to spread out the cost over several months.

The payback period was extended to give you more time to collect and pay the taxes. Payments made by January 3, 2022 will be considered timely, thanks to the fact that December 31, 2021 is a legal holiday.

Penalties and interest will start to apply on January 1, 2022 for any unpaid balances, so be sure to make timely payments to avoid additional costs.

The consequences of missing a tax deadline can be severe, but fortunately, the deferred tax deadline offers some relief. If you've missed the original deadline, you'll be glad to know that the period of April 15, 2020 until July 15, 2020 will be disregarded in the calculation of any interest, penalty or addition to tax.

This means you won't be charged interest, penalties, or additions to tax for the time your tax return was deferred. However, all deferred interest, penalties and additions to tax will begin to accrue on July 16, 2020, so it's essential to file your tax return as soon as possible to avoid any further penalties.

Late applications for tax exemptions or exclusions may be considered for good cause, but only if received by the last day of the calendar year in which the tax is levied.

If you're unable to apply on time due to physical or mental illness, infirmity, or disability, you may be able to get your application considered. This is just one example of good cause.

Death of the taxpayer or an immediate family member can also be considered a valid reason for a late application. Unfortunately, this is a difficult situation to find yourself in, but it's good to know that it's an acceptable excuse.

Active duty military deployment is another example of good cause for a late application. If you're serving your country, the last thing you should worry about is meeting tax deadlines.

What doesn't count as good cause? Taxpayer neglect, oversight, or lack of awareness regarding due dates. This means that simply forgetting or not knowing about the deadline won't get your application considered.

If you do need to apply late, the burden of proof is on you to show both good cause and eligibility for the exemption or exclusion.

Interest and Penalties can be a significant concern for those who've delayed filing their federal tax returns or paying their federal income taxes. The good news is that there's a temporary reprieve in place.

The period from April 15, 2020, to July 15, 2020, will be disregarded in the calculation of any interest, penalty, or addition to tax for the failure to file federal tax returns or the failure to pay federal income taxes.

All deferred interest, penalties, and additions to tax will begin to accrue on July 16, 2020. This is an important date to keep in mind if you're planning to make a payment or file your tax return.