Is There Any Such Thing as a “Typical” Tax Season?
Federal Tax Deadline Extended to May 17 – Check Your State Deadline
The IRS has delayed the April 15th federal tax filing deadline to May 17th. A mixture of tax law changes including stimulus payment eligibility, child tax-credit changes, and the unemployment compensation exemption had accountants and taxpayers calling for a tax filing extension, and Congress heeded their call.
More guidance is expected over the coming weeks, but for now we know that federal taxpayers are receiving an automatic extension, and penalties and interest will not be assessed until after May 17.
It’s important to note that the IRS has not provided relief for first-quarter estimated tax-payments (which as of now are still due on April 15th). If you are required to make estimated tax payments, then it is imperative to work with your accountant and financial adviser to avoid penalties.
State Taxes
The deadline delay only applies to the Federal 1040. States can choose whether to follow the IRS, keep their “normal” deadlines, or extend them. For instance, Maryland extended its deadline to July 15th prior to the IRS extending its due date. Estimated tax payments follow similar logic, so please double-check your state’s due dates to make sure you are following the most updated information for your tax situation.
Should I Wait to File My Tax Returns?
We encourage taxpayers who are expecting refunds and/or are claiming the recovery rebate credit to file as soon as possible. The faster you file, the faster you receive your refund(s) and can invest the proceeds. If you expect to owe tax, you can file now and pay the tax due by May 17th without penalty.
Extensions
If the pandemic and the tax law changes have made it difficult to file your tax return by May 17th, you can still file an extension which extends your Federal tax return’s due date to October 15th (although you must still pay any applicable tax due by May 17th to avoid penalties and interest).
Between the significant tax law changes and tax deadline updates, it’s more important than ever to have a plan and avoid unwanted surprises this tax season.
Sources: Kiplinger.com, wsj.com
This is intended for informational purposes only and should not be construed as personalized financial advice. Please consult your accountant or tax preparer regarding your unique circumstances.