Editor's note: In a previous version of this article, the headline stated that the tax filing deadline had been extended; instead, it is the deadline for paying tax owed that has been extended. The Fool regrets the error.
The impact of COVID-19 has been felt across the country. In addition to ravaging the stock market, it's already closed thousands of schools nationwide and shuttered small businesses, leaving millions of Americans to suddenly grapple with income insecurity.
Thankfully, the public will at least be receiving a bit of relief on the tax front. Treasury Secretary Steven Mnuchin just announced that taxpayers are getting a three-month extension for paying their 2019 taxes.
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Normally, taxes are due by April 15 every year, unless that date falls out on a weekend or holiday, in which case it's pushed back a number of days. Filers who can't complete their taxes by April 15 can request an extension, which buys them an additional six months to submit their returns without facing a failure-to-file penalty.
Tax extensions are granted automatically; filers don't need a specific reason for needing one. But those extensions only buy them extra time to submit their returns; they don't give them extra time to pay what they owe the IRS. And usually, filers who don't pay their taxes by April 15 face interest and penalties on that debt.
This year, filers can take an extra three months to pay the IRS any amounts due. That could be a lifeline for the millions of Americans who are currently scrambling to hang on to their paychecks, or those who have already taken a hit on their income.
It could pay to file sooner, though
While tax filers now have until July 15 to pay their 2019 tax bills, those who don't owe the IRS money would be wise to complete their returns by the original April 15 deadline, if not earlier. The reason? That way, they can collect their refunds (if owed them) sooner. This especially holds true for filers who are already seeing their earnings impacted as COVID-19 batters the economy.
The IRS typically issues refunds for electronically filed tax returns within three weeks. For returns filed on paper, that timeline doubles. But the sooner those in need of money get their returns in, the better. Along these lines, signing up for direct deposit will help taxpayers get their refunds more quickly; refund checks can more easily get delayed or lost in the mail.
Another thing: While the federal government is giving Americans more time to submit their tax returns and make good on their tax debt, different states are rolling out different guidelines for extensions. Those who plan to delay their federal taxes should see what leeway their home states are granting.
