As many individuals rejoiced to see the Form 1040 due date extended from April 15th to May 17th, it is important to understand what the extension applies to and whether you will get the relief you expect.
The IRS tax extension only applies to 2020 Federal income tax filings for individuals. Individual taxpayers can file for an extension on federal income tax payments for the 2020 tax year without penalties or interest, regardless of the amount owed. Individual taxpayers, including those who pay self-employment tax, can apply for a tax extension. If you miss the May 17th deadline, penalties, interest, and additions to tax will begin to accrue on any unpaid balances.
- Taxpayers can now delay filing their 2020 Federal income tax and Form 1040 until May 17th
- The new tax deadline will provide taxpayers additional time to contribute to an Individual Retirement Account (IRA), and thereby decrease their AGI and potentially reduce their overall tax burden
- Now that the due date is extended to May 17th, taxpayers will have time for any additional planning
- Income tax payments related to the 2021 tax year are excluded from the Federal extension
- Individuals that are required to pay Federal estimated quarterly tax payments will still be required to make their first quarter payment by April 15, 2021. This will not only affect individuals who are self-employed, but owners of flow-through entities and S Corporation shareholders as well
- Many taxpayers rely on the safe harbor rules for their 1st quarter Federal estimated tax payments
Have questions? Contact us to speak with one of our advisors!