In today’s post pandemic economy, taxpayers can use all the help they can get. The weakened economy and consumer unsurety have led to many workers filing for tax extensions this tax season. In fact, there has been so many tax extension requests already this year that the Internal Revenue Service has decided to delay the tax filing and payment deadline for individuals to from 15 April to 17 May for 2020 tax returns.
This unexpected response to the recent concerns raised by both lawmakers and tax professionals that many taxpayers need additional time to file and pay their taxes this year. The reasoning behind the need for additional time is contributed directly to the coronavirus pandemic and its effects on the economy.
Tax Deadline Extended To 17 May
Tax experts were hopeful that Americans would receive the same extension as last year when the IRS postponed the tax filing and payment date from 15 April to 15 July. Unfortunately, this year’s extension is much shorter as the government believes that the economy has strengthened, and pandemic restrictions has been relaxed in many states.
Still, the extension is a welcome relief for many taxpayers as they can now file their 2020 tax returns as late as 17 May without accruing any penalties or interest. Penalties, interest, and any additions to tax will, however, begin to accrue as of 17 May 2021 on any remaining unpaid balances.
The tax extension is automatic which means that taxpayers won’t need to do anything to be eligible. And, if additional time is needed, taxpayers can file Form 4868 for another extension, this time until 15 October.
What’s Not Covered Under The Tax Extension
There are certain exceptions to every rule and the tax extension relief is no different. The tax filing and payment extension applies only to federal taxes, not state or local taxes. Also, it does not apply to estimated tax payments that are due on 15 April 2021. Why are these payments still due on 15 April? Estimated tax payments are payments made by people whose income isn’t subject to income tax withholding on a quarterly basis. These typically include rental income, alimony, interest, dividends, and self-employment income.
Contact British American Tax
To learn more about the tax filing and payment deadline, contact British American Tax today and consult with an expert tax advisor who can answer any questions you might have about taking a pro-active approach to your tax planning.
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