With most of the country practicing social distancing or shelter-in-place to stop the spread of Coronavirus, the IRS is taking note and doing its part to help Americans, as taxes are likely the last thing on their minds. Treasure Secretary Steve Mnuchin announced on Twitter that Tax Day had been moved from April 15, 2020 to July 15, 2020. This means you have three extra months to file your tax return, but should you wait that long? We explain why delaying your filing date may not be the best idea.

Filing later has some consequences

Tax identity theft becomes more of a threat

This is something we’ve covered before, but filing later in the tax season usually means you’re more susceptible to tax identity theft. That’s because the longer you wait to file, the more time identity thieves have to file a phony return using your identity. Since the tax deadline has been extended for all taxpayers, it means we may see a spike in tax identity theft this year.

How can you protect yourself? 

The best thing you can do to protect yourself from tax identity theft is to file your taxes as soon as possible. Although you may not be able to go out on the town, you can still file your taxes using an online tax service or even a CPA that’s working remotely, as you can send the files through a secure portal or another safe manner — your CPA should be able to provide details on what they prefer. If you know you can’t make the July 15, 2020 deadline, be sure to file that extension now so you’ll get an Oct. 15, 2020 filing date.

We should note that if identity theft protection is something you’re concerned about, it might make sense for you to consider identity theft protection — our favorite is Identity Guard. These services will allow you to keep track of your credit, as they’ll alert you if something is added or changed on your reports. On top of that, most of these services will monitor your information on the Internet black market and alert you if your information is spotted. We should note that these services can’t prevent identity theft, but they can help you stay aware of who may have your information and the general health of your credit.

Paying tax bills may be challenging

The unfortunate reality of the Coronavirus pandemic is that some Americans are left without an income as businesses are closing their doors to protect their employees and customers. Although some employees have the ability to work from home, that isn’t an option for everyone, which means they will have to take a hit financially. Add to that the potential recession that may (or already has) hit the U.S., and it’s clear that some who owe the IRS money for the 2019 tax season may find it hard to pay.

What can you do? 

The best thing you can do is to file your taxes and contact the IRS. The agency offers payment plans, and as long as you keep communication open with them, they will likely be willing to work with you. Another option is to pay  your taxes with a 0% intro APR credit card, but considering the potential upcoming recession, you might have more payment flexibility if you work with the IRS.

Should you wait to file?

Although you may think waiting to file is a wise choice, it makes the most sense for you to file as soon as you can. Doing so will protect you from falling victim to tax identity theft and allow you to set up some payment options for your tax bill if you owe anything.

Want more tips on managing your finances? Follow our credit cards blog to learn how to use credit responsibly.

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