This past Wednesday (March 17, 2021), the IRS announced they are postponing the April 15 deadline to file and pay your income taxes. The new due date is May 17. The announcement does not come as a complete surprise as both tax practitioners and members of Congress had pushed for this postponement.
It is interesting to note that the new filing deadline only applies to individual taxpayers and does not, at least for the moment, apply to other returns such as corporations, partnerships, estates, and trusts. This could change.
It is expected that the April 15 deadline for making an IRA contribution for the 2020 tax year is also pushed back, but we are awaiting further guidance from the IRS.
There are a couple of dates that have not changed:
- Tax returns that need to go on extension still have to be filed by October 15.
- The first-quarter of 2021 estimated tax payments remain due on April 15.
You do not need to file any forms to alert the IRS you intend to file by May 17, although you may want to let your tax preparer know.
So, should you wait to file?
- You may not want to wait to file if any of the following applies:
- If you are due a refund, it probably makes sense not to wait so you can receive the refund sooner.
- If your 2020 income is lower than your 2019 income, and you will qualify for a stimulus payment check based on your 2020 income, you may not want to wait.
The recently passed American Rescue Plan Act exempted the first $10,200 of unemployment income from Federal taxation in 2020 for taxpayers whose adjusted gross income is $150,000 or less. The IRS has indicated how this is to be handled on your 2020 income tax return but has not yet issued an updated Form 1040. Therefore, if you collected unemployment insurance in 2020 and qualify for this exemption, you may want to wait to file. If you filed your 2020 return before this change was announced, the IRS is asking taxpayers to hold off filing amended returns as they issue further guidance on that issue as well.
Another reason to wait is to see if the IRS announces any further changes. Last year the IRS, through a series of announcements, each one adding to the prior one, eventually postponed the filing date for all filers, including corporations, partnerships, etc., until July 15, 2020.
State Tax Returns
As of the IRS announcement date, New York State and New Jersey have not announced whether they will also extend the filing date to May 17. If New York State and New Jersey do not extend the due date, you may still need to file your return by April 15 or face penalties and interest for filing late.
Stay tuned for any updates to the above, and, as always, let us know if you have any questions.