On Wednesday, March 17, 2021, the IRS announced the postponement of the April 15 tax return filing and payment deadlines. The new due date is May 17. The announcement does not come as a complete surprise as both tax practitioners and Congress members have been pushing for this postponement.
It’s important to note that the new filing deadline does not include everyone. The new 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.
Here are a couple of dates that have not changed.
- If you need an extension, those returns still need to be filed by October 15.
- Estimated tax payments for the first quarter of 2021 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.
Should You File Your Tax Return Now, or Wait?
You may be wondering if there is any advantage to waiting to file your income tax return. Here is a little guidance to help you make your decision.
Reasons to File by April 15 (or sooner)
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.
Reasons to Wait until May 17 to File
The recently passed American Rescue Plan Act exempted the first $10,200 of unemployment income from Federal taxation in 2020 for taxpayers whose AGI (Adjusted Gross Income) is $150,000 or less. While the IRS has indicated how to handle this on 2020 income tax returns, they have not 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 income tax return before this change was announced, the IRS has asked taxpayers not to file an amended return yet. They intend to issue further guidance on this issue.
Another reason to wait is to see if the IRS announces any further changes. Last year, the IRS made a series of announcements, each adding to the one before it. Eventually, they postponed the filing date for all filers until July 15, 2020.
When are State Income Tax Returns Due?
Within a few days of the IRS’s announcement, many states began to follow suit and extend their state filing deadlines. However, not all states have matched the IRS postponement date of May 17, choosing to stick with April 15 or selecting a new date entirely. This is expected to be a moving target, so contact your tax professional or Access Wealth advisor if you have specific questions.
The list below is not all-inclusive, but here are a few states you may care about that have postponed the deadline to May 17 for filing state income taxes:
- New Jersey
- New York
If you need information about a specific state, don’t hesitate to contact us. And remember, if you don’t file your return on time, you can face late penalties and interest.
As always, we will continue to keep you updated on additional changes that may occur.