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Filing Income Tax Returns for Refunds: Better Now Than Later

Filing Income Tax Returns for Refunds: Better Now Than Later

Posted by  on 29 March, 2020   4 minute read

With the new coronavirus pandemic showing no signs of slowing down, major economic and fiscal decisions have been taken by the U.S. government and relevant bodies. One of the biggest announcements made with regard to the economic situation in the nation came on March 20, 2020, when the Treasury Department announced a 90-day extension on the date for the filing of federal tax returns for the financial year 2019 and the first quarter of 2020. This means that now individuals, corporations and other eligible taxpayers can delay filing their returns and instead of filing it within April 15, 2020, they can take their time and send in their federal tax return statements by July 15, 2020.

Later in the week, the Treasury Department added that the date of payment of due taxes for 2019 and the first quarter of 2020 can also be extended up to July 15, 2020, without attracting any penalties or interest

Many have welcomed and cheered this announcement, especially those who are expats living abroad in countries under a lockdown or severely hit by the coronavirus, but some are skeptical about how useful this extension can be, in terms of helping the economy and the people.

Filing Income Tax Returns for Refunds: Better Now Than Later

Shortly after the announcement, the Secretary of the Treasury Department, Steven Mnuchin, tweeted “I encourage all taxpayers who may have tax refunds to file now to get your money.” This has led many to believe that it is best not to dilly-dally with the federal income tax returns if there is money in the form of refunds at the end of it. As the SARS-CoV-2 pandemic continues to jeopardize movement and economic growth all across the globe, there are no assurances on what further changes may appear as the year progresses. Certain things which can be said with certainty as of now include:

  • Processing and Clearing Returns is Ongoing!

The Treasury is continuing to process income tax returns and has already been handing out refunds to those whose advance tax paid exceeds the tax owed. While so far the established norm of clearing refunds within 21 days of electronic filing stands, there is no foretelling the future with the Covid-19 graph showing no signs of flattening out in the U.S. It is thus best to file the returns and get the refunds unless it is logistically difficult to do so or your return statement is most likely to show a large amount of tax payable, in which case it may be prudent to wait. 

 

  • Chances of Tax Forgiveness Close to Nil

It is highly improbable that the federal tax owed for the year 2019 as well as the first quarter of 2020 will be written off. So those who are withholding filing their returns in hope of something like that happening is in for a disappointment. To look at it from another perspective, those who are in a position to file as well as pay due taxes maybe actually doing their nation's economy a favor by bringing that amount into circulation. 

 

  • Cash at Hand is Better than Cash on Mind

A lot of individuals have been facing pay cuts due to global lockdowns and those who cannot work from home or hold stable corporate jobs including freelancers have been especially hit with no present source of income. Getting refunds to them can help them to tide through these hard times and ride the pandemic wave with some financial support. It is better to get the cash from tax refunds than stay in financial insecurity by delaying filing till the new tax date. 

The special tax dates are welcome relaxations for many expats and those who are unable to pay large sums in tax dues at present, but for those who anticipate refunds, it is best to file federal and/or state tax returns (as applicable) as soon as possible.