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
Can businesses deny you entry if you don’t have a vaccine passport?
As more Americans get vaccinated against COVID-19 and the economy begins reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.
Give me a snapshot of the labor market in the U.S.
U.S. job openings in February increased more than expected, according to the Labor Department. Also, the economy added over 900,000 jobs in March. For all of the good jobs news recently, there are still nearly 10 million people who are out of work, and more than 4 million of them have been unemployed for six months or longer. “So we still have a very long way to go until we get a full recovery,” said Elise Gould with the Economic Policy Institute. She said the industries that have the furthest to go are the ones you’d expect: “leisure and hospitality, accommodations, food services, restaurants” and the public sector, especially in education.
What do I need to know about tax season this year?
Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.
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