“Federal tax filing deadline extended” is hardly a headline you’d expect to find on a list of party-worthy announcements but let us shake our noisemakers for a moment in honor of some good news in a very bad year.
Huzzah! The IRS has given you more time to file your 2020 tax return! The deadline for filing is now May 17, 2021, instead of the usual April 15.
So grab a Mai Tai, head for the hammock, and take a load off.
Unless, that is, you owe the IRS money, or happen to live in Hawaii or New Hampshire (see below). If you’re those people, then you still should have paid or filed by April 15 (and now you’re late). Get back to your desk, or at least bring your laptop with you to the hammock.
Here’s everything you need to know about income tax filing this year.
Why is the deadline delayed?
The IRS realized that tax preparers (and us poor saps who do their taxes on our own) needed to have time to internalize all the effects the two pieces of COVID relief legislation are going to have on tax prep. Most importantly, this delay gives everybody time to see how they can maximize their benefits under the legislation.
For example, taxpayers who did not get their stimulus payments yet, including additional benefits for children and other eligible dependents, can apply for that money in their tax returns. Businesses might be able to deduct expenses they had in 2020, but they need time to get clarity on which are permissible. Businesses also need the criteria for forgiveness of Paycheck Protection Program (PPP) loans.
What was required on April 15?
If you are self-employed, then April 15 was still your Tax Day for Q1 estimated taxes. That deadline hasn’t changed. And if you owe money for your annual taxes, such as for earnings from interest, dividends, rent, and alimony, you were also supposed to send the IRS a nice little chunk of change by April 15.
If you live in a state that didn’t extend its filing deadline along with the IRS, like Hawaii and New Hampshire, then you owed your state a tax return by April 15.
Everyone else can sit pretty until May 17, when tax returns are due to the IRS and to most states.
What if I missed the deadline to pay?
Send it in as soon as you can! The IRS will probably ding you with a late-payment penalty, but that’s better than racking up interest and even more penalties, which is what will happen if you ignore this problem.
Do I have to wait until May 17 to file?
Just like you don’t have to wait until April 15 to file on a regular year, you don’t have to wait until the extended deadline this year. File whenever you feel like it – and the sooner the better if you are due a refund. To get that refund extra fast, e-file your taxes and give the IRS your direct deposit information
Chances are that more people will be getting refunds this year since millions of people’s taxable income went down in 2020 as a result of layoffs and slashed hours. If that happened to you, you might be eligible to get a larger stimulus payment in your taxes through the Recovery Rebate Credit calculation.
What about state taxes?
Most states are following the IRS and moving their income tax filing deadlines back to May 17. There are a couple of exceptions: Hawaii and New Hampshire announced that they’re sticking to April 15.
A few states have imposed various other deadlines, such as Maryland moving its filing deadline to July 15, and some states providing victims of winter storms with extra time.
Things are changing fast, so it’s a good idea to check with your state’s Department of Revenue or your tax preparer to make sure you’ve got your info straight. You can also check this up-to-date listing of state deadlines.
With taxes more complicated than ever this year, it might be a good time to consider working with a tax pro to help you make sure that you’re submitting on time — and getting every penny you’re owed.