Hi, Helaine: I see the government is allowing people to postpone paying their 2019 taxes till July of this year because of the coronavirus epidemic. I owe several thousand dollars. My taxes are prepared, and the money is set aside to pay the feds. What should I do now? I think I should keep the money in the bank till I absolutely need to send it in, but my wife says no, we owe the IRS, and we should pay up as soon as possible. — To Pay or Not to Pay
Dear To Pay or Not to Pay: Great question! The federal government is extending the deadline on filing and paying 2019 taxes (if you owe them) to July 15. That’s because they’ve got valid concerns that people who have been ordered to shelter in place, or are ill or quarantined but still need to meet in person with a tax preparer, will not be able to do so.
Let me be clear: For all the readers who expect refunds, file earlier if you can. It’s possible you’ll need that money as the economy continues to deteriorate as a result of the response to the coronavirus epidemic.
But let’s say you owe money. First, just because federal deadlines have been extended, that’s not necessarily true for all states. If you want to delay paying, you need to check if your state has pushed off its deadlines as well. And you need to answer another question: Why delay filing if the returns are already completed and you’ve got the money on hand to pay the tax bill? That comes down to your financial situation.
If you’ve got the money set aside to pay the tax bill, and you are absolutely positive you’ve got enough in emergency funds set aside to weather the coming economic storm, I’d say pay the bill now. What else are you going to do with the money?
But if you don’t have enough funds in the bank to live on should you lose a significant amount of income — an increasingly likely possibility for millions of people — I would suggest you not pay your tax bill at this point. You might need that money. In that case, keep the sum in your savings account, and in a worst-case scenario, you can work out a payment plan with the IRS after this crisis passes. In the best case, of course, you’ll pay the bill by July 15.
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