Arizona Tax Relief vs. Federal Tax Relief

<p>Tax, Business, and Estate Planning Update</p>

Arizona Tax Relief vs. Federal Tax Relief

The Arizona Department of Revenue provided tax relief to Arizona taxpayers on March 20, 2020 (revised April 1, 2020). Since that time, the IRS has provided additional tax relief. As of April 10, 2020, Arizona has not made corresponding changes to its state tax relief. 

In Arizona, individual, corporate, and fiduciary income tax returns originally due on April 15, 2020, are now due on July 15, 2020. The due date for paying the income tax has also been extended from April 15, 2020, to July 15, 2020. This relief does not apply to S corporation and partnership returns (Forms 120S and 165, respectively) because those returns were due on March 15, 2020. The relief only applies to income tax returns and tax payments due on April 15, 2020. In contrast, federal relief is not limited to returns and taxes due on April 15, 2020. It extends to fiscal year filers. Federal individual, corporate, fiduciary, and partnership income tax returns and associated taxes due, whether originally due or due by extension, from April 1, 2020, through July 15, 2020, are now due on July 15, 2020.

At both the state level and the federal level, taxpayers can still seek an extension to file their income tax returns beyond the July 15, 2020, deadline. If an Arizona taxpayer wants to extend the due date for filing an income tax return beyond July 15, 2020, the taxpayer files the appropriate federal form (Form 4868 and 7004) with the IRS. In Arizona, when the taxpayer requests an automatic extension to file a federal income tax return, the taxpayer automatically gets a six month extension (5 ½ months for a fiduciary return) to file the corresponding Arizona return. No extension form needs to be filed with the Arizona Department of Revenue. However, to qualify for the automatic extension in Arizona, at least 90% of the Arizona tax must be paid by July 15, 2020 (originally April 15, 2020). At both the federal and state level, the original due date for the return (and not July 15, 2020) is used to determine the extended due date.

The following due dates have NOT changed in Arizona:

  1. Estimated tax payments due on April 15, 2020, are still due on April 15, 2020. In contrast, the IRS has extended the deadline for federal estimated income tax payments. Estimated payments originally due on April 15, 2020, and June 15, 2020, are now due on July 15, 2020.
  2. Arizona taxpayers receive a tax credit for qualifying donations to certified school tuition organizations, public schools, and qualifying charitable organizations. Donations made in calendar year 2019 qualify for the tax credit on the 2019 tax return. Donations made between January 1, 2020, and April 15, 2020, can apply to the taxpayer’s 2019 or 2020 return, at the taxpayer’s discretion. The April 15, 2020, deadline has not changed. Donations made after April 15, 2020, will only apply to the 2020 tax year.