It’s official: The Internal Revenue Service has pushed the April 15 tax day deadline to May 17. That means that individuals can postpone filing—and paying—2020 taxes until then.
“Even with the new deadline, we urge taxpayers to consider filing as soon as possible, especially those who are owed refunds. Filing electronically with direct deposit is the quickest way to get refunds, and it can help some taxpayers more quickly receive any remaining stimulus payments they may be entitled to,” said IRS Commissioner Charles Rettig in the IRS announcement.
“This extension is absolutely necessary to give Americans some needed flexibility in a time of unprecedented crisis,” said U.S. Rep. Bill Pascrell Jr., the chairman of the House Ways & Means Subcommittee on Oversight, in a statement about the push to make tax day later this year due to the pandemic and law changes.
Penalties, interest and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021, the IRS warned. Also, the relief is not extended to the 2021 tax filing season, so for taxpayers who pay into the system via estimated tax payments including many retirees and gig workers, the first estimated tax payment deadline of April 15 is still in place.
The IRS started the filing season late, on February 12, as it was sending out Round 2 stimulus payments and reprogramming systems with tax law changes from the year-end Covid relief package. By March 5, the IRS had already sent out 36 million tax refunds, but that number was down 31.6% from the same time last year. Returns received were down 18%, and total returns processed down 25%, according to IRS filing statistics.
Simultaneously with processing tax returns, the IRS is now sending out the third round of stimulus payments passed in the $1.9 trillion American Rescue Plan President Joe Biden signed into law last week. The IRS announced today that it has already dispersed 90 million of the nearly 160 million payments in the first batch that started processing last Friday, just one day after the law was signed.
The latest relief package included a provision exempting up to $10,200 in 2020 unemployment benefits from federal tax for taxpayers with income up to $150,000. That kind of last-minute legislative change really messes with the tax filing season. Another wrinkle: In a switcheroo, the IRS said recently that it will deliver full Round 1 and Round 2 stimulus payments to those with federal tax debts when they file their 2020 tax returns and claim the recovery rebate credit.
Those are examples of last-minute changes. There are many more new tax issues due to the pandemic. There are laid-off workers who picked up gig jobs filing a Schedule C for the first time. There are retirees who took retirement account distributions early in the year, then put them back in when Congress retroactively waived RMDs for 2020 (report this as a rollover). You get the idea.
The May 17 extension also means that taxpayers will have more time to fund or top up individual retirement accounts and health savings accounts for tax year 2020. Contributions are due by the due date for the return for that tax year.
In February, victims of Texas winter storms got their own special tax extension—that’s typical in disaster situations. The disaster tax relief postponed various tax filing and payment deadlines that occurred starting on February 11. As a result, affected individuals and businesses in Texas have until June 15, 2021, to file returns and pay any taxes that were originally due through June 15, including individual and business returns and federal estimated payments normally due April 15. The new May 17 deadline does not apply to them.
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March 18, 2021 at 03:02AM
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New Tax Day Deadline: Monday, May 17, 2021 - Forbes
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