Federal Tax Filing Deadline Extended!
The IRS recently announced that the federal income tax filing deadline for individuals for the 2020 tax year will be extended from April 15, 2021 to May 17, 2021. The deadline extension is meant to provide relief to taxpayers who are facing challenges due to the pandemic and to the IRS as it handles a rising backlog of unprocessed returns. I wanted to take a moment to update you about how this change may affect you and your business.
Individuals can postpone federal income tax payments for the 2020 cycle to May 17, 2021, regardless of the amount owed and without penalties or interest. This allowance extends to all individual taxpayers, including those who pay self-employment tax. All interest, penalties, and additions to tax will accrue starting May 17, 2021; automatically avoid interest and penalties by paying any owed amounts by May 17th.
The best part about this extension is that you don’t have to do anything to qualify for this relief; it’s automatic. However, if you need additional time, you can request a filing extension as you normally would, which would give you until October 15th to file.
Deadline NOT Extended for Estimated Payments
This is extremely important for our clients who pay quarterly estimated taxes. Those payments (for income made in 2021) are still due on April 15, 2021. If your income is not subject to tax withholding, and you are required to make quarterly estimated payments, you must still pay by April 15th. Income not subject to tax withholding includes self-employment income, interest, alimony, dividends, interest, prize winnings, and income from rental properties.
Extension Applies to Federal Taxes NOT State
Note that this extension only applies to your federal income tax returns and payments. The extension does not apply to state tax payments or payments of other types of federal tax.
State tax deadlines can vary from the federal deadlines. Be sure to check with us or the state tax authority if there is any confusion about when your state tax returns and payments are due.
It’s also important to note that this extension is completely optional, and as usual, you should plan to file as soon as you’re ready.
As always, give us a call if you have any questions about how this extension may affect your business.
-Stanley & Kelly