In response to growing pressure from several professional organizations and Congressional leaders (see recent post), the Internal Revenue Service has extended the federal income tax filing due date for individuals. On March 17, 2021, the IRS issued IR-2021-59 to announce that the federal income tax filing deadline for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. Individual taxpayers do not need to file any forms or call the IRS to qualify for this automatic federal tax filing and payment relief.
Individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without any penalties or accrued interest. This 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.
This relief does not apply to (tax year 2021) estimated tax payments that are due on April 15, 2021. Due to this exception for estimated payments, the deadline extension provides only limited relief to many taxpayers (who are required to make quarterly estimated tax payments), as the information required to file their 2020 returns may be needed by the original deadline to calculate the 2021 estimated payments due on April 15, 2021.
Perhaps the primary beneficiary of the deadline extension is the IRS. The agency, which has been underfunded for many years, has struggled with staffing issues due to the pandemic and challenges from last year’s filing season delays, as well as the additional responsibility of sending out several rounds of stimulus checks, most recently in the middle of the tax-filing season.
The delayed 2020 filing deadline also provides the IRS with a bit more time to provide additional guidance on recent changes to unemployment benefits and expanded tax credits that were enacted as part of the American Rescue Plan Act. The Agency has promised that more details on these programs will be issued in the coming days.
Note: this tax filing deadline postponement only applies to individual federal income returns and tax (including tax on self-employment income) payments otherwise due April 15, 2021, not state tax payments or deposits or payments of any other type of federal tax. Additionally, it is important to note that C corporation returns, which are due on April 15th have not been granted any delay in the April 15, 2021 filing deadline.
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. UPDATE 3/19/21 – Pennsylvania has extended the filing deadline to May 17th
Individual taxpayers who need additional time to file federal returns beyond the May 17 deadline can request a filing extension until Oct. 15 by filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov.
As always, feel free to contact your GYF Tax Executive at 412-338-9300 for assistance.