This year taxpayers will have an additional month to file returns, The IRS and Treasury Department announced the April 15 tax-filing deadline and tax payments will be postponed to May 17, 2021. This date will also be the deadline for Individual taxpayers to submit an extension to file their returns until October 15, 2021. However, taxes that are due must be paid with the extension to avoid interest and penalties. The IRS is expected to release additional guidance.
Moving the Deadline Helps Taxpayers and Preparers
This extension has eased tax preparers’ challenge to understand federal programs like the Paycheck Protection Program (PPP), and Employee Retention Credits (ERC).
Individual taxpayers can also defer federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without penalties and interest, regardless of the amount owed. The postponement applies to individual taxpayers, including individuals who pay self-employment tax. Penalties, interest and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. Individual taxpayers will automatically avoid interest and penalties on the taxes paid by May 17th.
The federal tax filing deadline postponement to May 17, 2021, only applies to individual federal income returns and tax (including tax on self-employment income) payments otherwise due April 15, 2021, and does not include state tax payments or deposits, or payments of any other type of federal tax. Federal estimated income tax payments are still due April 15, 2021. The AICPA advocates for deadline postponements for estimated tax payments to help millions of small business owners and individuals, trust income tax payments, and corporate income tax payments.
Individual taxpayers do not need to file any forms to qualify for the automatic federal tax filing and payment relief. If Individual taxpayers need additional time to file beyond the May 17 deadline, taxpayers can request an extension until October 15 by filing Form 4868. Filing Form 4868 gives taxpayers until October 15 to file their 2020 tax return but does not grant an extension of time to pay taxes due. Taxpayers should pay their federal income tax due by May 17, 2021, to avoid interest and penalties.
Pennsylvania and Other States Move the Tax Deadline
The deadline for taxpayers to file their 2020 Pennsylvania personal income tax returns and make final 2020 income tax payments is extended to May 17, 2021. The extension 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. Pennsylvania estimated income tax payments are still due on April 15, 2021.
State filing and payment deadlines vary and are not always the same as the federal filing deadline. The IRS urges taxpayers to check with their state tax agencies for those details.
A list of state revenue agencies that have extended their individual tax filing and payment deadlines include Alabama, Colorado, Illinois, Kansas, Kentucky, Maine, Missouri, Montana, New Mexico, South Carolina, West Virginia, and Wisconsin. Revenue officials in Arizona, North Dakota, and Iowa told Bloomberg Tax they were studying the issue and expected to make decisions shortly. Massachusetts said they were committed to approving the May 17 date. California, Utah, Oregon, and Maryland previously announced plans to extend their deadlines. The expectation is for more states to follow.
We will continue to provide additional updates regarding this legislation. There is a lot of available information available to assist taxpayers experiencing COVID-19 related financial difficulties to be aware of these options and get assistance. Contact us today to review your options.
Maria is a Partner at Wilke & Associates, servicing closely-held businesses in manufacturing, real estate, transportation/logistics, technology industries, and high net worth individuals and executives in delivering effective tax strategies.