The Covid-19 pandemic and the lingering effects of tax reform have created considerations when extending tax returns.

Normally, a six-month federal extension for an individual return involves filing Form 4868, which sometimes also automatically extends the time to file a state tax return but grants no extra time to pay any taxes due.

This year, though, the deadline to request an extension to file and pay federal taxes is July 15, compared with the usual April 15. Any American, including those who live and work abroad, has until mid-July to file their 2019 federal income tax return and pay tax that’s owed.

“A formal extension can be requested until Oct. 15,” said Nate Smith, Clearwater, Fla.-based director in the CBIZ MHM national tax office. Again, the October deadline is to file; owed federal taxes are still due by July 15.

The IRS has also postponed income tax returns and income tax payments until July 15 for individuals, trusts, estates and corporations, said Craig Richards, director of tax services at Fiduciary Trust Company International in New York. “This includes self-employment tax for 2019, as well as estimated federal income tax payments due April 15,” he said. “If you still cannot file by July 15, you should file an extension.”

Estimated federal tax payments for both the first and second quarters of this year were recently extended to July 15.

Most states have followed the federal schedule regarding business and individual returns, but “state tax filing deadlines aren’t in lock step with the federal government's deadlines,” said James Beam, regional investment manager with TD Wealth in Philadelphia. “You must confirm when your state filing deadlines are.

“For taxpayers who expect to owe, the extended deadlines may provide some breathing room,” he added. “But at some point, the government will collect. This shouldn't be an invitation to put off all taxes. If you decide to file an extension, you could be doing so in the face of penalties and interest.”

The extended deadline automatically offers benefits that clients historically received from a regular extension, such as extra time to find missing tax documents or fine-tune returns. Some wealthy clients who might have filed for an extension also don’t have to worry about one of the biggest misconceptions of Form 4868: that it triggers audits.

“Additional time to file may be welcome news for those who are fearful to extend,” said James G. McGrory, a CPA at Drucker & Scaccetti in Philadelphia.

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