Update on COVID-19 - Tax Deadlines and Mortgage Relief
Federal - Tax deadlines
The Treasury Department and IRS are extending the due date for filing federal income tax returns to July 15, 2020. This applies to all taxpayers whose return would have been due April 15, 2020. There is no limitation on the amount of tax due for the extension to apply. The extension is automatic; Forms 4868 or 7004 do not have to be filed. The extension also applies to any payment of federal income tax, including payments of tax on self-employment income, with
respect to the 2019 tax year, as well as quarterly payments of estimated tax for the 2020 tax year. The period from April 15, 2020 to July 15, 2020 will be disregarded for purposes of calculating any interest, penalty or addition to tax for the failure to file a return or pay a tax due April 15, 2020. The extension does not apply to payments or deposits of any other type of federal tax, nor does it apply to extend the due date for the filing of any federal information returns. (Notice 2020-18, March 20, 2020)
California - Tax deadlines
CDTFA. Through May 15, 2020, individuals and businesses impacted by COVID-19 may seek filing and payment extensions, relief from interest and penalties, and filing claims for refund, applicable to all tax types administered by the CDTFA. (COVID-19 State of Emergency, California Department of Tax and Fee Administration, March 2020)
EDD. Employers directly affected by COVID-19 may request up to a 60-day extension to file their state payroll reports and/or deposit payroll taxes without penalty or interest. (Tax Branch News, Employment Development Department, March 9, 2020)
FTB. Personal income tax and corporate tax filing/payment deadlines postponed to July 15, 2020. This includes deadlines for all individuals and business entities for 2019 tax returns and payments, 2020 1st and 2nd quarter estimated tax payments, 2020 LLC taxes and fees, and 2020 non-wage withholding payments. (News Release, Franchise Tax Board, March 18,
Potential Mortgage Relief
If you have been placed in a position of financial hardship due to the Coronavirus, your mortgage provider may be able to provide some relief in the form of forbearance. A forbearance agreement is a temporary postponement of your mortgage payments. A forbearance agreement doesn't forgive any of the principal, it either tacks the principal on to the end of the loan, making your repayment period longer; or renegotiates the monthly payment to accommodate for the postponement period. Many of the largest mortgage servicing companies in the U.S. are currently working hand in hand with the federal government to negotiate terms.
Steps to take:
Visit your mortgage provider's website and take notes. They have likely posted a message specifically addressing the pandemic and each provider's process in applying for hardship relief may be different.
Check back regularly because the information is being updated at least daily
Begin the process, which will likely entail having to get on the phone with them and fill out an online application (along with copious amounts of documentation).
Act swiftly, but be patient. You want to get an agreement in place before you miss your first mortgage payment, but understand that there millions of Americans in the same position.
Questions to ask:
How long is the forbearance period and will I be charged interest on the outstanding principal?
Will this negatively impact my credit score?
How long does the process take?