One year into the pandemic, Americans are trying to find a balance between staying safe and handling their day-to-day responsibilities. One major challenge we all face this time of year whether in a pandemic or not, is filing our taxes on time. Last week, less than one month until Tax Day, the IRS announced an extension for the 2021 tax filing season. Below is everything you need to know about why the IRS decided to extend the tax filing deadline and what it means in regard to filing your 2020 taxes.
2021 Deadline Extension
Last week on March 17, 2021 the IRS announced that the tax filing deadline will be extended by one month, as the new deadline is May 17, 2021.
One of the main reasons for the delay is due to the continued disruption from COVID-19. As a reminder, the IRS delayed the start of the 2021 tax season as well. Typically, tax season starts on the first of the year, however, this year the IRS delayed the start until February 12, 2021. This delay to the start of tax season gave the IRS additional time to reprogram and prepare their systems so everything runs smoothly.
In addition, there will be no late penalties or fees for tax returns filed up through May 17, 2021 - regardless of how much you may owe. In order to receive your refund in a timely manner, the IRS strongly advises taxpayers to file electronically and set up a direct deposit.
Since the start of tax season was delayed by just over a month, it comes as no surprise that the tax filing season was extended. This extension may be a welcomed change to many still coping with what is becoming one of the most complicated tax seasons in decades.
Why Was the Deadline Extended?
The following statement was released by the IRS regarding the extended tax filing deadline, "This continues to be a tough time for many people, and the IRS wants to continue to do everything possible to help taxpayers navigate the unusual circumstances related to the pandemic, while also working on important tax administration responsibilities."1
Another reason for the deadline extension is due to congress recently passing the American Rescue Plan Act on March 11, 2021, promising eligible Americans $1,400 stimulus payments. The timing of this legislation is complicated, as the third stimulus package was passed right in the middle of tax season - many Americans have already filed, while many others have not. Since the stimulus payments are actually considered tax credits, any indiscretions or missing payments were initially meant to be resolved when a tax return was filed. This extension of the tax filing deadline may have to do with helping eligible Americans receive or request their latest stimulus payment - although this reason was not specifically given by the IRS in their official statement. If you are concerned about receiving your stimulus payment, your CPA or financial advisor can assist you by answering any questions you may have about the latest stimulus package.
A Reminder About Texas, Oklahoma & Louisiana
The IRS has also extended the tax deadline until June 15th for the 2021 tax filing season for several southern states including Texas, Oklahoma, and Louisiana as they faced severe weather towards the end of February, causing mass power outages, food shortages, destruction to homes and more. 1 This extension is for Texas, Oklahoma & Louisiana residents only. If you live in these states, your local and state tax deadlines may have been extended as well.
For those who have already filed their taxes, this deadline extension will not change much. And while a deadline extension can be helpful for many, it’s still important to get your tax return taken care of. If you haven't already, feel free to reach out to your financial advisor or CPA to review the necessary paperwork for the 2020 tax year.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.