How does an extra 90 days to pay taxes help Americans?
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You still have to file your taxes by Wednesday, April 15, but if you owe money to the federal government, you don’t have to pay until mid-July.
Treasury Secretary Stephen Mnuchin announced this to keep an estimated $300 billion in liquidity circulating to counteract the economic drag of COVID-19. It’s a penalty-free, interest-free delay.
George Smith, a certified public accountant with Andrews Hooper Pavlik near Detroit, explained how this will work and how it’s going to help his clients. Below is an edited transcript of his conversation with David Brancaccio.
George Smith: The due date is still a hard due date at this time, as far as we know, but there is an extension of time to pay any tax obligations.
David Brancaccio: Do you think this postponement will help any of your clients as a practical matter?
Smith: Most definitely. I think we have two categories of clients we’re going to deal with here: those who have regretfully lost their jobs due to layoffs. The obligation to pay your 2019 taxes does not go away regardless of circumstances. So, in light of that, it at least gives them a 90-day window with or without employment to perhaps come up with a game plan.
The other group that I see are recent retirees who have recognized a lot of capital gains because the market was way up in 2019. Now they’re paying taxes on those gains from a portfolio that has diminished some 30% in value. So they will be paying higher taxes with, in essence, lower-value money. I mean, again, this gives 90 days, perhaps, for the stock market to somewhat recover, too. And there’s a lot of concerns here, too.
COVID-19 Economy FAQs
Are states ready to roll out COVID-19 vaccines?
Claire Hannan, executive director of the nonprofit Association of Immunization Managers, which represents state health officials, said states have been making good progress in their preparations. And we could have several vaccines pretty soon. But states still need more funding, she said. Hannan doesn’t think a lack of additional funding would hold up distribution initially, but it could cause problems down the road. “It’s really worrisome that Congress may not pass funding or that there’s information circulating saying that states don’t need additional funding,” she said.
How is the service industry dealing with the return of coronavirus restrictions?
Without another round of something like the Paycheck Protection Program, which kept a lot of businesses afloat during the pandemic’s early stages, the outlook is bleak for places like restaurants. Some in the San Francisco Bay Area, for example, only got one week of indoor dining back before cases rose and restrictions went back into effect. Restaurant owners are revamping their business models in an effort to survive while waiting to see if they’ll be able to get more aid.
How are hospitals handling the nationwide surge in COVID-19 cases?
As the pandemic surges and more medical professionals themselves are coming down with COVID, nearly 1 in 5 hospitals in the country report having a critical shortage of staff, according to data from the Department of Health and Human Services. One of the knock-on effects of staff shortages is that people who have other medical needs are being asked to wait.
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