The federal government has extended the taxes due date 2021 from April 15 to May 17. The decision comes amid the coronavirus pandemic. The extension is automatic and applies to all filing and payments. If you haven’t paid your taxes for 2020, you can pay them before May 17, 2021, to avoid any interest or penalties.
Let’s delve into the new tax deadline extension and what you need to know about it.
What Is Extended for 2021?
The Internal Revenue Service (IRS) officially extended the federal income tax filing on March 17, 2021. The deadline was extended from the previous date of April 17 to May 17. Hence, taxpayers who owe money can file tax returns until May 17.
The extension applies to almost all filers, including:
- And more
Additionally, it applies irrespective of the amount of tax you owe, and there won’t be any additional interest or penalties until May 17. The previous deadline – April 15 – was also the IRA contribution deadline. Therefore, the new deadline will push the IRA contribution deadline of 2019.
For instance, the IRA contribution limit (2020 standard) is $6,000 for citizens under 50 years of age and $7,000 for those who are 50 or older. If you have already reached the contribution limit for the 2020 tax year, you can start contributing towards the 2021 tax year. The limit for this year is also $6,000.
Also, please note that the extension isn’t applicable for 401(k) retirement savings accounts.
Where Do the Taxes Due Date 2021 Don’t Apply?
The taxes due date 2021 extension applies to federal taxes only. The majority of states have decided to stick to their normal tax deadlines; however, some states have declared a later tax filing deadline.
These states include:
Apart from that, there are states where state return isn’t necessary. These states are:
- New Hampshire
- South Dakota
Further Extension of Taxes Due Dates 2021
You can file Form 4868 and request an extension to Oct. 15 if you need more time to pay your federal returns. You can do so through tax software, a Free File link on the IRS website, or through a tax professional. However, it’s crucial to note that filing Form 4868 only gives you an extension to file your 2021 tax return and not to pay taxes due. You’ll need to pay your due federal income tax by May 17 to avoid additional interest or penalties.
If you file a return through the mail, be sure to postmark it on May 17 or sooner. If you’re not able to file your tax return by May 17, you’ll need to file an extension request by the same date. Additionally, keep in mind that the income tax return schedule hasn’t undergone any changes. It remains the same, acting as an incentive for people who pay taxes on time.
The Effect of Taxes Due Dates 2021 on Taxpayers
Now, how will the extension affect taxpayers? The extension is applicable to everyone from individuals and LLC businesses to trusts and estates. May 17 is your new federal tax filing deadline and you don’t need to take action to avail of the benefits of this extension.
However, it’s recommended not to wait until May 17 and file your taxes sooner, especially if you’re expecting tax refunds. The federal government states that it wants the tax refunds to reach people as quickly as possible. This would help people cope with the pandemic, but to achieve that, people will need to first pay their taxes on time.
Why Is the Tax Deadline Extended?
The rising wrath of COVID-19 is the major reason the IRS has decided to extend the tax due dates 2021. Most US citizens pay their taxes online and seldom meet an accountant in person. These individuals are at minimal risk of spreading the virus.
However, not all citizens have this luxury, especially older adults who aren’t well acquainted with the new technology. They work with their accountants, which increases the risk of coronavirus transmission. Furthermore, various free tax preparation services like Tax Counseling for the Elderly (TCE) and Volunteer Income Tax Assistance (VITA) are conducted in public places. They are not currently accessible, posing a challenge for many taxpayers.
Amid the pandemic, many people who earlier relied on accountants would be encouraged to pay their taxes online by themselves. But people who have never paid taxes online might require extra time to get their records together. Providing a deadline extension would help people file their taxes electronically without any hassles.
These new changes could seem pretty trivial to people who generally pay their taxes online. But with the social distancing guidelines in practice, paying taxes can be a challenging process for many individuals. This extension can act as a cushion for them to better manage their taxes and other financial affairs.
Tax Deadline Extensions for May 17
Now that you know the reason for the deadline extension, let’s look at tax deadlines for May 17 that you shouldn’t miss.
- Federal income tax returns
- Extension requests
- Solo 401(k) and sep contributions for 2020
- IRA contributions for 2020
- HSA and Archer MSA contributions for 2020
- Payroll taxes for household employees
- Coverdell ESA contributions for 2020
- State tax returns
- Claim for 2017 refund
If you’re saving for retirement, college, health savings, or something else, you might have to take action by May 17. And even if you’re not, the last thing you want during these hard times is to get penalized and end up paying more returns. Keep these nine tax deadlines in mind and plan your finances accordingly.
Wrap Up: Taxes Due Date 2021
Less than two weeks are left for the final date of filing this year’s tax returns. If you haven’t paid your taxes for 2020 yet, do so now to avoid penalties. And if you want an extension for your 2021 taxes, file a Form 4868 to get an extension till Oct. 15.