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Treasury Secretary opens door for a further tax deadline extension, but should you file your taxes now?

Treasury Secretary opens door for a further tax deadline extension, but should you still be looking to file your taxes now?
(Image credit: Pixabay)

Treasury Secretary Steven Mnuchin has revealed he is thinking about extending the July 15 tax deadline for a second time, as Americans continue to struggle with the economic fallout from the coronavirus pandemic.

Another delay would give taxpayers even more time to dust down the best tax software and file their taxes after they have already been afforded an extra three months to get their financial affairs in order this year. Back in March, the Internal Revenue Service (IRS) announced that the traditional April 15 deadline for federal 2019 income tax returns would be moved back to July 15 to allow for the difficulties taxpayers would face filing amid the COVID-19 outbreak. 

Now, however, with the revised deadline just over three weeks away, Mnuchin has said he may consider a second due date extension. 

“It’s something I’m thinking about,” he said during a Bloomberg Invest Global virtual event. “As of now I’m not intending on doing that, but it’s something we may consider.”

Will the tax deadline move again? 

Several groups, including the National Treasury Employees Union (NTEU), have been pushing to extend the tax filing deadline to October 15 as a means to further alleviate pressure on both tax-filers and those whose job it is to process the returns. 

Treasury Secretary opens door for a further tax deadline extension, but should you still be looking to file your taxes now?

(Image credit: pixabay)

NTEU originally suggested mid October because that is the deadline given to anyone who asks for an extension in a normal tax filing season. Delaying the deadline for another three months would also effectively provide some much-needed support to the U.S. economy, as money that would normally have been paid to the IRS will remain with individuals and businesses for a little while longer - Mnuchin himself estimated that the original three-month delay had the net effect of injecting around $300 billion of liquidity into the economy. 

That the IRS had received 136.5 million individual income tax returns as of June 12, some way down on the 144 million that were received last year, could be another potentially important figure. The suggestion that a number of people are seemingly still struggling to file, even with the additional time that they have already had, might also influence thinking over a further extension. 

What should I do about filing my taxes? 

While the musings of the Treasury Secretary might tempt some people to leave their tax software untouched for a little while longer, there are no cast iron assurances that the deadline will be extended again. For this reason, it is essential that anyone yet to meet their tax-filing obligation starts to prepare for July 15 right now

File for a normal extension

If you already know that you have left it too late, and stand no chance of being ready in time for July 15, do not gamble on the IRS announcing a formal extension to the deadline. Instead, you should file for the extension that the IRS already allows, either on the IRS website, via your tax preparer, or by mailing Form 4868 to the IRS. That way, you will have until October 15 to file your federal tax return regardless of whether Mnuchin decides to make his own move. 

Treasury Secretary opens door for a further tax deadline extension, but should you still be looking to file your taxes now?

(Image credit: Pixabay)

Importantly, however, you’ll still need to pay your tax bill by July 15 to avoid potential penalties. And also bear in mind that July 15 is only relevant to federal tax returns, and not necessarily state income taxes. While every state with a personal income tax has extended their April 15 due date, not all have moved the new date to July 15, so you should check your state’s department of revenue website to make sure. 

Tax refunds

If you are yet to file your taxes, but don’t feel you should need an extension, it is probably best to file as soon as possible. This will allow you to get any tax refund you are owed as soon as possible. Three-quarters of tax filers were entitled to a refund for 2018, receiving on average $3,000, and with processing backlogs at the IRS building, delaying filing will only increase the amount of time you need to wait to get this money back. 

Importantly, July 15 is the definitive deadline for those who think they might be owed a refund for 2016, so filing a prior tax year return within the next few weeks is a must to make sure that money ends up with you. And if you are still waiting for your coronavirus stimulus check to arrive, it might be the case that the IRS needs you to file either your 2018 or 2019 tax return before they can send it out. 

“The majority of Americans have filed,” Mnuchin said. “The majority of those people that needed to get refunds got them. I’d encourage all Americans, if you can file your tax returns, go ahead and do it, particularly if you think you have a refund.”

With almost half of Americans admitting to tax filing mistakes, the best tax software can improve your accuracy and take the stress out of filing.  

With over 20 years’ experience in the financial services industry, Tim has spent most of his career working for a financial data firm, where he was Online Editor of the consumer-facing Moneyfacts site, and regularly penned articles for the financial advice publication Investment Life and Pensions Moneyfacts. As a result, he has an excellent knowledge of almost areas of personal finance and, in particular, the retirement, investment, protection, mortgage and savings sectors.