What does the 90-day delay on paying and filing taxes mean?

The Trump administration has announced that individuals and businesses will be allowed to delay filing and paying their federal tax bills for 90 days as part of an emergency relief plan amid the coronavirus pandemic.

Here are some questions and answers about the delay and its potential impact on the U.S. economy.

Do I still need to file?

No.

American taxpayers will have until July 15 to file their tax returns, Treasury Secretary Steven Mnuchin said Friday, a move intended to offer additional reprieve to individuals and companies in the middle of the coronavirus.

The White House had announced previously they were deferring tax payments for 90 days, but that Americans would still need to file by April 15.

Who gets to wait to pay?

Mnuchin said individuals who owe less than $1 million will be able to delay paying. Corporations will be able to defer payment on taxes due up to $10 million. Mnuchin said only the “super rich” would be excluded.

The administration has been seeking ways to blunt the eco

nomic impact of the coronavirus outbreak, which is expected to cause harm to both major industries and small businesses. Economists have predicted a potentially historic spike in unemployment claims.

Will I be penalized for waiting to make payments?

No. During this unprecedented delay, individuals and corporations will not be subject to interest or penalty payments.

And taxpayers can still request a sixmonth extension to file returns, like they could in any other year.

What if I am expecting a refund?

If you are expecting a refund, continue to file as usual. As of now, the IRS is still processing returns and sending out refunds.

“I encourage all taxpayers who may have tax refunds to file now to get your money,” Mnuchin wrote.

Does this apply to state taxes too?

No. Check with your state tax authority to see about any changes to due dates. Some are not extending their deadline, others are following the federal model and others still are setting their own deadlines. California, for example, has bumped its date for filing and payment of state taxes to June 15.

How will this help the economy?

Mnuchin has said that delaying tax payments will inject $300 billion of temporary liquidity into the U.S. economy.

However, some say the tax delay will not provide widespread financial relief.

Howard Gleckman, a senior fellow at the nonpartisan Tax Policy Center, says he thinks it will have a limited impact. That is in part because about three-quarters of Americans get refunds in any year and won’t benefit from a delayed tax bill.

The IRS expected about 150 million individual tax returns. As of the most recent count, about 68 million taxpayers have already filed.

Those who file early tend to be lowand middle-income individuals who are getting a refund. Higher-income individuals, or those with complex taxes who owe money to the government, tend to file later, Gleckman said. This move will provide some relief for them, but Gleckman warns that higher-income individuals have extra cash, and they tend to save it, not spend it. That leaves lower-income individuals, who need it most and are more likely to go out and spend it, without relief from this move.