Taxpayers have extra time to contribute to their individual retirement accounts now that the Internal Revenue Service has extended the tax filing and payment deadlines to July 15. In a just-released FAQ on the extension, the IRS states that contributions can be made to an IRA, for a particular year, at any time during the year or by the due date for filing your return for that year.
The FAQ cites Notice 2020-18, in which the Treasury Department and IRS announced special federal income tax return filing and payment relief in response to the ongoing coronavirus pandemic.
Because the due date for filing federal income tax returns has been postponed to July 15, the deadline for making contributions to your IRA for 2019 is also extended to July 15, the IRS explained, directing taxpayers to Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs).
“This can help people by giving them more time to see if they still have the funds to make the IRA contributions they might have always made in the past,” IRA expert Ed Slott told ThinkAdvisor in an email.
Slott said it’s “likely there’s more financial uncertainty and worry now clouding the decision, maybe due to the loss of a job or other income.”
Advisors, Slott counseled, “should review this situation with clients. If clients decide to wait until after April 15 to make a 2019 IRA contribution, advisors should make sure the contribution is earmarked and coded for the 2019 tax year, and then confirm that with the IRA custodians.”
The IRS notice also confirms — in Question 16 — that the first-quarter 2020 estimated tax payment that would have been due on April 15 is now delayed to July 15, Slott notes. “But the second 2020 estimated tax installment due June 15, 2020 is not extended. This is just weird. Now the second installment is due before the first installment.”
The IRS also notes that the relief does not apply to filing and payment due dates for estate and gift taxes. “Normal filing and payment due dates continue to apply” in that regard, the IRS said.
The IRS also clarifies that taxpayers “do not have to be sick, or quarantined, or have any other impact from COVID-19” to qualify for relief.
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