On March 17, the IRS ended weeks of speculation and issued an information release (IR-2021-59), which provides individual taxpayers an additional month to file their income tax returns.
Individuals now have until May 17, 2021, to file their Form 1040, and no interest or penalty on taxes due will begin to accrue until that date. This date came as a surprise to many, given that many lawmakers and industry groups were pushing for a June or July extended due date.
The May deadline extension does not affect those taxpayers impacted by the winter storms that impacted Texas, Louisiana, and Oklahoma. Those taxpayers still have until 6/15/21 to file income tax returns.
While the extension of the deadline was a welcome relief to many taxpayers, it is not a blanket extension for all returns or payments due on 4/15/21.
First, the extended due date applies to individuals only. C-corporations and trusts were not granted an extension of time to file or pay, and the due date for those returns remains 4/15/21 at this time.
Secondly, an individual’s first estimated payment for the 2021 tax year is due 4/15/21. Unlike the individual income tax return, this estimated payment is still due on the original due date. Many taxpayers will be utilizing “safe harbor” estimate payments based on 2020 income for their first-quarter estimate payments, meaning a taxpayer will still need to have an accurate estimate of their 2020 income tax by the original 4/15/21 deadline.
Finally, this extension only covers an individual’s federal income tax return. Some states, like Kentucky, are on record as stating they will follow any federal extended deadlines. Most states, however, have made no formal announcements on an extended deadline. When faced with a similar situation last year, most states eventually acquiesced, but there is no guarantee they will follow suit and adopt the federal deadline again this year. For a listing of all state tax administration websites, click here.
So where does this leave individual taxpayers?
For those needing a few extra days to gather information or get resolution on a matter, this is the breathing room you were looking for. For corporations or trusts looking for an extension of time to file, you’re likely a bit disappointed with the IRS leaving those entities out of the recent extension. Should you need it, an automatic extension of time to file is still available and will extend individual, C-corporation and trust returns to a 10/15/21 due date.
As more guidance is released, we will continue to send updates. If you have questions or need assistance filing extensions of time to file your returns, please reach out to Derek Gray or your local Blue & Co. advisor.