One year into the pandemic, Americans are continuing to strike a balance between staying safe and handling their day-to-day responsibilities. One major challenge we all face this time of year (pandemic or no pandemic) is filing our taxes on time. Recently, the IRS announced an extension for the 2021 tax filing season. Here’s what you need to know about filing your 2020 taxes.
2021 Deadline Extension
The IRS has announced that the tax filing deadline will be pushed back one month, until May 17, 2021, with no late penalties or fees for tax returns filed up through this date, regardless of how much you may owe.1
IRA & HSA Deadline Extension
On March 29, the IRS confirmed that individuals may continue to make 2020 contributions to their tax-advantaged accounts up until May 17, 2021, including IRAs and Roth IRAs, and Health Savings Accounts (HSAs).2
What About Estimated Tax Payments?
On March 29, the IRS confirmed that the deadline for estimated tax payments, or quarterly payments, will not be extended. Those who pay quarterly taxes will still be expected to pay by April 15, 2021.2
What Does This Mean for Illinois Taxpayers?
Illinois' individual income tax filing and payment deadline has also been extended from April 15 to May 17. Similar to Federal taxes, the extension does not apply to estimated Illinois state tax payments, which are still due on April 15, 2021.
Why Was the Deadline Extended?
According to a statement released by the IRS, "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
In addition, the American Rescue Plan Act passed in early March, promising eligible Americans $1,400 stimulus payments. The timing of this legislation is tricky, as it fell right in the middle of tax season - many Americans have already filed, while many others haven’t.
Because 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. It’s possible the extension of the tax filing deadline could, in part, 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're concerned about receiving your stimulus payment, your CPA can answer any questions you may have regarding that process.
David Rappaport, CFP®
David is the Co-Founder and Chief Investment Officer of Rappaport Reiches Capital Management. He acts as personal CFO to entrepreneurs and corporate executives, providing organization and clarity in their finances. Please connect with David below. He loves to talk about investing, financial planning, and Aspiritech, a non-profit hiring individuals on the autism spectrum.