A few weeks ago, the IRS extended the federal income tax filing due date for individuals for the 2020 tax year from April 15, 2021, to May 17, 2021. Individuals can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without penalty and interest. With the original deadline quickly approaching we wanted to send out this reminder regarding the postponement but to also highlight some items that may be overlooked.
This postponement applies to individual taxpayers, and the penalties, interest and additions to tax will begin accruing on any remaining unpaid balances as of May 17, 2021. The only reason to file an extension would be if you need extra time to file beyond May 17, 2021. All 2020 tax payments are due by May 17 regardless of if you are filing an extension to avoid interest and penalties.
A very important note regarding this relief is that it does not apply to estimated tax payments for the 2021 tax year that are due on April 15, 2021. This means that while you have till May 17th to file and pay your 2020 tax you still may need to know what your tax liability is in assisting you in making your 2021 Q1 estimated tax payment depending on your situation. It is also important to remind everyone that this relief does not apply to any other tax filings due on April 15, 2021 such as corporation or trust. In addition, it is extremely valuable to let people know that if they have state tax filings this may not be applicable. Many states have not extended their deadlines which could create confusion and may cause taxpayers to potentially miss a deadline so taxpayers should know their situation and the implications.
For those taxpayers affected by the relief from the February winter storms in Texas, Oklahoma, and Louisiana, this announcement by the IRS will not impact the already extended deadlines. These three states have until June 15, 2021, to file various individual and business tax returns and make tax payments including their estimated tax payments. Similar to the IRS extension for all individuals to May 17th, this federal extension may or may not apply to a taxpayer’s state tax returns so again taxpayers must review their facts and circumstances to avoid missing any deadlines.
If you have any questions regarding the tax extension relief and how it might affect you or your business, or if you require any other assistance with your tax planning and/or compliance needs, please do not hesitate to contact one of our knowledgeable team members.
