Just last month our very own Barbara Weltman wrote an article about tax extension myths . We don’t know if the Treasury Department and Inte...
Just last month our very own Barbara Weltman wrote an article about tax extension myths. We don’t know if the Treasury Department and Internal Revenue Service read it, but they just announced the extension of the tax filing and payment deadline to May 17. The extension will apply to individuals and the self-employed.
In the announcement, the IRS says the postponement applies to federal income tax payments for the 2020 tax year due on April 15, 2021. There will not be penalties and interest, regardless of how much you owe.
As for penalties, interest, and additions to tax, they will not begin to accrue on any remaining unpaid balances until May 17, 2021. And these taxpayers will avoid interest and penalties on the taxes paid by May 17.
IRS Extends Tax Filing Deadline to May 17 for Individuals and Self-Employed
In the announcement for the extension, IRS Commissioner Chuck Rettig says the goal is to help Americans address the challenges brought on by the pandemic. Rettig adds, taxpayers, should file as early as possible, especially if they expect refunds. And the best way to file is electronically with direct deposit.
Some Relief for the Self-Employed
Close to 30% of Americans are self-employed, and the pandemic has been particularly hard on them. And although the one-month extension by the IRS may seem trivial at first, nevertheless it is a relief. That one month can be the difference between being able to come up with the money to pay their taxes or start paying penalties and interest.
Review of the Key Points from the Announcement
- Individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021.
- There will not be penalties and interest, regardless of the amount owed.
- This postponement applies to individual taxpayers, including individuals who pay self-employment tax.
- Penalties, interest, and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021.
- Individual taxpayers do not need to file any forms or call the IRS to qualify for this automatic federal tax filing and payment relief.
- This relief does not apply to estimated tax payments that are due on April 15, 2021. These payments are still due on April 15.
- Taxes must be paid as taxpayers earn or receive income during the year, either through withholding or estimated tax payments.
Additional Extension
Remember you can always ask for an additional extension if the May 17 deadline is not enough. The IRS says you can request a filing extension until Oct. 15 by filing Form 4868. You can use tax software, your tax professional, or the Free File link on IRS.gov.
When you file the extension using Form 4868 you will have until October 15 to file your 2020 tax return. However, it doesn’t give you an extension of time to pay taxes that are due. If you want to avoid interest and penalties, you should pay your federal income tax due by May 17, 2021.
There is another extension for the winter storm disaster relief for Louisiana, Oklahoma, and Texas. For victims of the storm, these states have until June 15, 2021, to file individual and business tax returns and make tax payments. The new extension to May 17 will not affect their June deadline.
The IRS says it will provide formal guidance on this announcement in the coming days, so keep an eye on its site, IRS.gov.
Image: Depositphotos
This article, "IRS Extends Tax Filing Deadline to May 17 for Individuals and Self-Employed" was first published on Small Business Trends
from Small Business Trends https://ift.tt/30UWddd
