In a repeat from last year, the IRS just announced it’s postponing the federal income tax deadline from April 15 to Monday, May 17, 2021 to give tax preparers and taxpayers extra time to absorb the new tax regulations contained in the recently passed $1.9 trillion American Rescue Plan stimulus bill.
Why are taxes getting pushed back a month?
“This continues to be a tough time for many people,” said IRS Commissioner Chuck Rettig. “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.”
Due to the pandemic, the IRS started this year’s tax season later than usual, and has to update tax forms and software to reflect the numerous, last-minute tax changes just approved by Congress and signed by the President.
You may remember the serious delays last year when the IRS went on lockdown. Millions of envelopes containing tax checks and correspondence were held up when there were not enough workers at the IRS to open and process the mail. The tax deadline extension this year will give the IRS time to catch up and try to pull off a smoother tax season.
Of course, if you need even more time, you may request an additional tax extension to October 15 for your personal tax return, although tax liabilities are still due by May 17.
What about taxes I may owe?
The IRS has said that individual taxpayers can postpone federal income tax payments for the 2020 tax year to May 17 without penalties and interest, but be sure to consult your tax advisor to see how the postponement may affect you and your individual situation.
Be aware that estimated tax payments due on April 15th must still be made by that date to be considered timely.
What about my IRA and other retirement contributions?
The deadline for making Traditional IRA, Roth IRA and other retirement contributions that were previously due on April 15 will be extended to May 17th. The IRS will be providing more details shortly, so stay tuned.