Update on IRS Filing Guidance and 2020 Recovery Rebate

Volume No. US-20-09

2019 Filing Due Dates

In previous U.S. Tax Tips we have reported that the U.S. Congress has extended the tax payment and filing deadline for those with an April 15, 2020 due date to July 15, 2020.  Relief is automatic; affected taxpayers do not have to call the IRS or file any extension forms, or send letters or other documents to receive this relief. However, not all taxpayers (i.e., June 15th filers) were accorded this automatic extension. 

On April 9th, the IRS released IR-2020-66 and IRS Notice 2020-23.  The IRS now states that all payments and filings due on or after April 1st, 2020 and before July 15th, 2020 will now receive an automatic extension to July 15th, 2020.  This extension applies to nonresident aliens filing Form 1040NR, “U.S. Nonresident Alien Income Tax Return,” to U.S. citizens living abroad, and other filers.

Taxpayers can still request an additional time to file by filing the appropriate extension form.  For individuals that is Form 4868, “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.”  The IRS guidance indicates that at this time, these “normal” extension deadlines are not, themselves, extended.

As a result of the postponement of the due date for filing, the period beginning on April 1, 2020, and ending on July 15, 2020, in general, will be disregarded in the calculation of any interest, penalty, or addition to tax for failure to file or to pay payments postponed by this notice. Interest, penalties, and additions to tax with respect to such postponed payments will begin to accrue on July 16, 2020.

Should I e-file or paper file my U.S. tax return?

The IRS recommends that all taxpayers file their returns electronically through their tax preparer, tax software provider or IRS Free File if possible.

The IRS is not currently able to process individual paper tax returns. The IRS also advises that if you have already filed your return via paper filing but it has not yet been processed, do not file a second tax return or write to the IRS to inquire about the status of your return. Paper returns will be processed once the processing centers are able to reopen.

At Cadesky U.S. Tax, we routinely e-file our clients’ U.S. tax returns whenever possible.  However, some U.S. tax returns do no qualify for electronic filing and must still be paper filed.

2020 Economic Impact Payment Update

In a prior U.S. Tax Tip we provided information regarding the US $1,200 cash rebate (the 2020 Recovery Rebate advance payment) as provided for in the CARES Act. However, many eligible taxpayers were not able to receive the payment since they were not required to file a 2018 nor 2019 U.S. individual income tax return (for example, those whose income was below the filing threshold). 

To address this issue, the IRS launched a new web tool allowing for quick registration for those who don’t normally file a tax return, to qualify for the Economic Impact Payments.  The feature is available only on IRS.gov, and users should look for Non-filers: Enter Payment Info Here.

Taxpayers who use this tool will need to provide basic information including their Social Security Number, name, address, and dependents. The IRS will use this information to confirm eligibility, calculate and send an Economic Impact Payment. Entering bank or financial account information will allow the IRS to deposit your payment directly into your U.S. bank account. The IRS does not make deposits to foreign bank accounts, instead the IRS will mail a check to the last address they have on file.

The IRS is reviewing their procedures with respect to Social Security recipients who may have not been required to file a U.S. individual income tax return.  They hope to provide guidance for these individuals in the near future.

We will continue to monitor IRS guidance as it is released and provide relevant information in future U.S. Tax Tips.

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The material provided in this U.S. Tax Tip is believed to be accurate and reliable as of the date of posting. Tax laws are complex and are subject to frequent change. Professional advice should always be sought before implementing any tax planning arrangements. Neither Cadesky Tax nor Cadesky U.S. Tax can accept any liability for the tax consequences that may result from acting based on the contents hereof.