Typically, you have until April 15th to file your taxes. This year, however, is different. In response to the pandemic, the IRS had the tax deadline extended to May 17th, 2021.
This extension will give you an extra month to file your federal tax returns. If you need more time, you can still take advantage of the 5-month extension with Form 4868 and file by October 15th, 2021.
Why You Should File Your Returns Early
If you’re able, filing your tax returns before the deadline may provide you with any refund earlier. Filing electronically with direct deposit may expedite your refund even more. If you file sooner rather than later, you’ll make it more difficult for someone to illegally file a return using some of your personal information and take your refund money.
State, City, and Business Tax Returns May Not Be Extended
The May 17th extension only applies to individual federal income returns. States and cities can choose to maintain or extend their current tax filing deadlines. Therefore, you may have to file your state or city tax returns sooner.
Your federal income tax due date hasn’t changed if you own a business or an exempt organization. If you’re a C corporation, you must file by April 15th, 2021, or ask for an extension. If you’re an exempt organization, your filing deadline is May 15th, 2021, unless you request an extension. Additionally, if you pay estimated tax payments every quarter, the extension does not apply to you. You’ll be required to meet the specific deadlines of April 15th, July 15th, September 15th, and January 15th.
Federal Income Tax Payments
If you owe money to the IRS, rest assured you can also postpone your federal income tax payments for the 2020 tax year to May 17th, 2021. You won’t have to pay any penalties or interest, no matter how much you owe. This filing requirement holds if you’re an individual taxpayer, even if you pay self-employment tax. Penalties and interest will only begin to accrue on unpaid balances as of May 17th, 2021.
Consult Your Tax Professional
Review your tax situation with your tax professional and determine how the tax deadline extended may effect you. If you have questions about your investments and taxes, reach out to your financial professional to start tax planning for next year’s filing, especially if you anticipate any distributions from your taxable assets.
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While tax and legal issues may be discussed in the general course of financial and investment planning, Simplicity Wealth does not provide tax or legal services. Please consult with your tax or legal professional prior to making decisions relative to these issues.
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