IRS Issues Limited Extension of April 15 Tax Deadline
This week the IRS announced that the federal tax deadline for certain taxpayers has been extended from April 15, 2021, to May 17, 2021. The extension is designed to provide additional relief for individual taxpayers in light of the ongoing COVID-19 pandemic.
The IRS extension to May 17 applies only to 2020 federal income tax returns for individual filers (Form 1040) and the related tax payments due. This extension will happen automatically, and if a payment is owed, filers will not incur interest or penalties until after May 17.
At this point, it’s unclear whether the individual states will extend their own tax deadlines, but we will continue to monitor the state rulings and developments. Note that the IRS previously extended federal tax deadlines for residents of Louisiana, Oklahoma, and Texas to June 15, 2021, in the wake of the winter storm disaster declarations.
What Didn’t Change
Because the IRS announcement applies only to individual returns and payments due, it excludes many other tax filing and payment deadlines that are due by April 15. This means that tax returns and payments for C corporations, trust and estates, and certain other filings are still due by April 15. Additionally, 2021 first quarter estimated tax payments for individuals and businesses are still due by April 15.
What You Should Do Now
While the federal income tax filing deadline for individuals has been extended until May 17, our recommendation is to continue working toward the tax deadline as if it was still April 15. This enables us to more quickly evaluate your tax position in order to determine what is most beneficial for you. For those who will receive a refund, we can file your return so you receive the payment as soon as possible. For those who will owe tax, you can proactively determine the amount and then plan to delay the payment until closer to the deadline.
For those who pay quarterly estimated tax payments, please continue to work closely with your KSM advisor to ensure they have all the information needed to calculate your estimate so you can make the payment prior to the April 15 deadline.
We’re Here To Help
The IRS has stated that more guidance will be released in the coming days. As always, we continue to closely monitor federal, state, and local legislative changes and market conditions to help our clients effectively navigate these changes and mitigate the financial effects. If you have questions about how this extension affects your situation, please reach out to your KSM advisor or contact us. We appreciate the opportunity to serve you as we navigate these changes together.
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