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Treasury Announces 90 Day Extension


On March 17th, the Treasury Department announced a 90 day extension to pay income taxes for many federal taxpayers. The IRS has issued the following guidance:

Individual Taxpayers

Individual taxpayers may defer up to $1 million in tax payments which are due on April 15, 2020. This limitation is the same for both single and married taxpayers and only applies to income taxes, which include self-employment tax for the 2019 tax year. This deferral also applies to trusts and estates.  

While up to $1 million of the payment can be deferred until July 15, the individual filing deadline is still April 15. Therefore, if a tax return is not filed by April 15, an extension must be filed. The payment deferral applies to April 15th first quarter 2020 estimated tax payments as well. The $1 million limitation is in aggregate, meaning a combination of 2019 income taxes as well as first quarter 2020 estimated taxes. If more than $1 million is owed, the excess over $1 million is due on April 15.

Corporations

Corporations will also benefit from the 90 day deferral. Up to $10 million of federal income tax payments can be deferred for C corporations and consolidated groups.

State Relief

Many states have already followed suit and more information will be available in the upcoming days. For instance, California has already granted a 60 day extension, including estimated tax payments, for many state taxpayers.

The ability to defer some or all of the income tax payment until July 15 presents taxpayers with a significant opportunity to manage their cash flow more effectively.

To learn more about the impact of this important announcement, connect with a member of Berntson Porter by calling 425-454-7990 or visiting www.bpcpa.com. We’re here to help!