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Clearing up confusion on the IRS's latest grace period

In the midst of everything else that is currently going on in the country and across the globe, some aspects of life have to go on regardless. For instance, taxpayers here in Missouri and elsewhere have tax returns to attend to.

Recently, the Secretary of the Treasury, Steven Mnuchin, announced that taxpayers will receive some relief from that obligation. However, the news reports on the change have apparently caused some confusion that needs clarification before innocent people get into trouble with the IRS.

Here's what is happening

Taxpayers know that the deadline for filing federal and state income tax returns is April 15. This year, the deadline could come right in the middle of social distancing, voluntary isolation and shelter in place initiatives growing around the country. Along with these measures comes a degree of financial upheaval for many people.

In response, Mnuchin announced that anyone who owes taxes for 2019 will automatically receive an extension of 90 days in which to pay without fear of interest or penalties. However, that extension does not apply to the filing of federal income tax returns, which still need to be filed by April 15 or extended through the filing of an extension by that date. Taxpayers under the impression that they also have an extra 90 days to file their returns could find themselves in trouble.

The advantages to taxpayers

If you anticipate receiving a refund, you will get much needed cash that could come in handy, especially right now. If you owe money, filing by April 15 gives you the automatic 90-day extension to pay. Mnuchin says that you could take advantage of this as long as you don't owe more than $1 million. That number may seem high, but it helps small businesses and pass-through businesses.

Your obligation to pay taxes if you owe is only postponed, not eliminated. When the 90 days is over, you will need to pay. As the filing deadline looms, you may need help making sure that amount is as low as possible when the times comes to pay it. These are uncertain times, and you deserve to keep every dollar you can of your hard-earned money. Contacting an experienced tax attorney for advice and assistance could help you get through this tax year as smoothly as possible.

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