As we wade through the daily information overload, it’s easy to overlook some of the seemingly minor yet important factors that impact our financial well-being. On top of the social issues we’re addressing as well as the stock market, unemployment statistics, and other anxiety-inducing aspects of the economy that are grappling for our attention, it’s likely the regular stuff, like taxes, that’s falling to the wayside in our minds. But dropping the ball can mean missing out on much needed help or missing an important deadline and getting hit with penalties.
For one, we’re nearly a month out from the tax filing extension deadline. Back in March, as we came to grips with the uncertainties in the months to come, the IRS extended the federal income tax filing due date from April 15 to July 15, 2020. Taxpayers have also been able to defer federal income tax payments that should have been due on April 15 to the extension date without penalties or interest. But somehow, July 15 is on the horizon now, so it’s time to make sure the ducks are in a row for filing federal taxes soon.
The looming deadline also applies to individuals and corporations that make quarterly estimated tax payments as well as people who live and work abroad. This means that anyone, including Americans who live and work abroad, nonresident aliens, and foreign entities with a U.S. filing and payment requirement, have until July 15 to file their 2019 federal income tax return and pay any taxes that are due.
But that’s not all. Amid the filing extensions and other relief for taxpayers in response to COVID-19, the IRS is continuing to roll out other updates that we should all know about. Here are a few that I have found are particularly important, interesting, or useful to Americans right now.
Interest Rates to Decrease in the Third Quarter
This month, the IRS announced that interest rates on overpayments and underpayments of taxes will decrease for the third quarter of 2020, beginning July 1. The rates will be:
- 3% for taxpayers’ overpayments
- 2% for corporations’ overpayments and 0.5% for the portion of a corporate overpayment exceeding $10,000
- 3% for underpayments
- 5% for large corporate underpayments
The rate of interest is determined on a quarterly basis. The overpayment and underpayment rate for taxpayers is the federal short-term rate plus three percentage points.
Economic Impact Payment Scams Are Happening
New financial scams are playing on the fear and uncertainty surrounding COVID-19 to steal unsuspecting taxpayers’ personal information and money. In addition to flat-out stealing some Americans’ Economic Impact Payments, criminals are also conducting phishing schemes to obtain personally identifying information or financial account numbers and passwords.
It’s critical to take action immediately in response to anything that might be a scam. Taxpayers can report fraud or theft of their Economic Impact Payments to the Treasury Inspector General for Tax Administration. Those who receive unsolicited emails or social media messages — which often appear to be from the IRS or a closely related organization — can report them by forwarding the message to firstname.lastname@example.org.
Renewable Energy Gets a Break
The IRS is providing tax relief for taxpayers who develop certain renewable energy projects, many of which have faced delays in the supply chain due to COVID-19. Wind, biomass, geothermal, landfill gas, trash, and hydropower projects that produce electricity qualify for relief, as do technologies such as solar panels, fuel cells, microturbines, and combined heat and power systems.
More Updates in the IRS Newsroom
These announcements are just a drop in the bucket when it comes to the many updates that have recently been announced. Visiting the IRS Newsroom is the best way to get all this information in one place and see the latest tax-related updates.
A West Point graduate where he served as captain and military aviator, John Bair continues his commitment to our country through his efforts within the settlement planning industry. He has represented families of victims lost in the Flight 3407 crash, offered pro bono services to the families of 9/11 victims and drafted the first consumer protection bill for plaintiffs (H.R. 3699).