The IRS has announced that the federal income tax filing deadline for individuals filing Form 1040 for the 2020 tax year is extended from April 15, 2021, until Monday, May 17, 2021. The IRS extended the deadline to provide relief to taxpayers facing challenges as a result of the pandemic and because it’s grappling with a rising backlog of 24 million unprocessed returns. As part of its announcement, the IRS stated it would soon be issuing additional guidance about the deadline extension.
Extended deadline details
Individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without additional penalties and interest. Penalties and interest will begin to accrue on any remaining unpaid balances as of May 17, 2021.
No forms are required to be filed to qualify for this automatic federal tax filing and payment relief. If you need additional time to file beyond the May 17 deadline, you can request a filing extension until October 15 by filing Form 4868. Filing Form 4868 gives you until October 15 to file your 2020 tax return but doesn’t grant you an extension of time to pay taxes due. You should pay the federal income tax due by May 17, 2021, to avoid interest and penalties.
Estimated payment deadline NOT extended
This relief doesn’t apply to estimated tax payments that are due on April 15, 2021. These 2021 payments are still due on that date. Taxes must be paid as taxpayers earn or receive income during the year, either through withholding or estimated tax payments. In general, estimated tax payments are made quarterly to the IRS if your income isn’t subject to income tax withholding. This includes self-employment income, interest, dividends, prize winnings, alimony and rental income. Many taxpayers automatically have taxes withheld from their paychecks and sent to the IRS by their employers.
Pennsylvania and New Jersey deadlines also extended but status of other states unknown
The PA Department of Revenue announced the deadline for taxpayers to file their 2020 PA-40 personal income tax returns and make final 2020 income tax payments is also extended to May 17, 2021. This means the Department of Revenue will waive penalties and interest on final 2020 personal income tax returns and payments through the new deadline of May 17, 2021. The deadline for estimated 2021 PA income tax payments remains the same at April 15, 2021 and has NOT been extended.
New Jersey has decided to follow the IRS individual taxpayer filing deadline of May 17; however, estimated 2021 NJ income tax payments are still due April 15, 2021.
Does this extension really help?
The American Institute of Certified Public Accountants (AICPA), acting on behalf of tax practitioners, had been requesting an extension of filing deadlines to help ease the burden on taxpayers and tax professionals whose normal tax season workload increased with late-breaking legislative changes arriving with passage of the Consolidated Appropriations Act (CAA) and the American Rescue Plan Act (ARPA). Unfortunately, extending the tax filing deadline without extending estimated tax payments does little to alleviate the burden since the tax return work has to be done to calculate estimated payments.
If you have questions regarding the information outlined above, please contact your DunlapSLK team member. As always, we are here to help!