Summary: Important tax dates; postponement only applies to individual taxpayers; be sure you’re paying only what you should in income taxes
As people still try to figure out last year’s global public health emergency and its impacts, we’re addressing important tax dates for this year in addition to the following topics:
Postponement & Penalties
Estimated Tax Payments
State Tax Returns
California Applicable Credits
Future Key Dates
Everyone needs to be sure they’re paying only what they should in income taxes during this unusual and confusing tax season.
Are you getting back every last income-tax dollar you deserve? Or are you paying more than your fair share?
POSTPONEMENT & PENALTIES
To start things off, the Treasury Department and Internal Revenue Service announced that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021.
For more dates that will affect 2021 taxes, scroll down to the section title: Future Key Dates.
According to IRS Commissioner Chuck Rettig in recent IRS news: “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.”
Individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without 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 will automatically avoid interest and penalties on the taxes paid by May 17.
Individual taxpayers do not need to file any forms or call the IRS to qualify for this automatic federal tax filing and payment relief. Individual taxpayers who need additional time to file beyond the May 17 deadline can request a filing extension until Oct. 15 by filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov.
Filing Form 4868 gives taxpayers until October 15 to file their 2020 tax return but does not grant an extension of time to pay taxes due. So, another important date for taxpayers is October 15. Taxpayers should pay their federal income tax due by May 17, 2021, to avoid interest and penalties.
The IRS urges taxpayers who are due a refund to file as soon as possible. Most tax refunds associated with e-filed returns are issued within 21 days.
ESTIMATED TAX PAYMENTS
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.
In general, estimated tax payments are made quarterly to the IRS by people whose income isn’t subject to income tax withholding, including self-employment income, interest, dividends, alimony or rental income. Most taxpayers automatically have their taxes withheld from their paychecks and submitted to the IRS by their employer.
STATE TAX RETURNS
The federal tax filing deadline postponement to May 17, 2021, only applies to individual federal income returns and tax (including tax on self-employment income) payments otherwise due April 15, 2021, not state tax payments or deposits or payments of any other type of federal tax.
Taxpayers also will need to file income tax returns in 42 states plus the District of Columbia. State filing and payment deadlines vary and are not always the same as the federal filing deadline.
The IRS urges taxpayers to check with their state tax agencies for those details.
WINTER STORM DISASTER RELIEF FOR LOUISIANA, OKLAHOMA, AND TEXAS
Earlier this year, following the disaster declarations issued by the Federal Emergency Management Agency (FEMA), the IRS announced relief for victims of the February winter storms in Texas, Oklahoma and Louisiana.
For taxpayers located in these states, mark June 15 as an important tax date. You have until June 15, 2021 to file various individual and business tax returns and make tax payments. This extension to May 17 does not affect the June deadline.
In Sacramento, the Franchise Tax Board (FTB) announced that, consistent with the Internal Revenue Service, it has postponed the state tax filing and payment deadline for individual taxpayers to May 17, 2021.
“We recognize what a challenging year this has been for Californians statewide,” said State Controller Betty T. Yee, who serves as chair of FTB. “I am pleased we are able to postpone tax filing and payment deadlines for all individual taxpayers in California to May 17. Hopefully, this small measure of relief will continue to allow people to focus on their health and safety and navigate the complexities caused by the pandemic.”
As stated earlier in this article, this postponement applies to individual California filers whose 2020 tax returns and payments were originally due on April 15, 2021.
California taxpayers do not need to claim any special treatment or call FTB to qualify for this postponement. FTB will waive any interest and late payment penalties that would otherwise apply if the returns are filed and the payments are made by May 17.
CALIFORNIA APPLICABLE CREDITS
During this public health emergency, FTB continues to process tax returns, issue refunds, and provide phone and live chat service to taxpayers needing assistance.
If possible, taxpayers should continue to file tax returns as soon as possible to get fast refunds and to claim any applicable credits, including the California Earned Income Tax Credit (CalEITC) and the Young Child Tax Credit.
Those receiving CalEITC, and others who file with an Individual Taxpayer Identification Number (ITIN) and had $75,000 or less in income last year, may be eligible for a Golden State Stimulus payment of $600 or $1,200, upon filing their 2020 tax return.
PAST KEY DATES FOR TAXPAYERS
April 15: The first installment of estimated payments for 2021 were due.
Most taxpayers pay their income taxes, Social Security and Medicare taxes when their employer withholds taxes on their paycheck. Gig workers, independent contractors, sole proprietors and other self-employed individuals have no employer, so they’ve got to pay the taxes themselves. That happens through estimated payments, which are sliced into four installments per year.
Though the IRS postponed the income-tax-filing date for the 2020 tax year, it kept the estimated-payment schedule intact for 2021 and has received some criticism for not extending this deadline as well. In addition to April 15, estimated payments for this tax year are due on June 15, Sept. 15 and Jan. 18, 2022.
UPCOMING KEY DATES FOR TAXPAYERS
May 17: 2020 federal income-tax returns are due, as well as taxes owed.
Monday, May 17, marks the date when taxpayers have to submit their 2020 tax return and pay any taxes owed. The 2020 return is a taxpayer’s final opportunity to claim missed-out-on stimulus-check money from 2020. A taxpayer receives the money through the “Recovery Rebate Credit,” and the money gets lumped into a person’s refund, or is paid in that manner if no refund would otherwise be forthcoming.
Here’s a longstanding caveat on the filing deadline: A taxpayer can receive an extension up to Oct. 15 to file an income-tax return. But if they owe taxes, the filing date is still the last day to pay without penalties and interest. If someone is unable to fully pay by the deadline, the IRS offers installment plans.
May 17 is the last chance to shrink your 2020 tax bill through contributions to an IRA or Health Savings Account, and it’s also the final chance to file a 2017 return and claim a refund for that year.
Bear in mind that the May 17 deadline only applies to federal income taxes. States may have also copied the IRS and pushed back deadlines for their income-tax returns, but those dates will vary. As of earlier this week, 36 states had pushed their tax deadlines to May 17, according to a list compiled by the American Institute of Certified Public Accountants.
The IRS had received 93.2 million returns as of April 2. The average refund has been $2,893.
Beginning in May: Start of refunds based on returns readjusted for the March relief legislation.
The $1.9 trillion American Rescue Plan passed in March included a valuable tax break for people who received unemployment benefits during 2020. The relief bill said the first $10,200 received in benefits is not subject to federal income tax. The income-tax exclusion applies to households making less than $150,000 a year. The exclusion is $20,400 for married couples filing jointly.
By the end of February, there were 5.4 million people who had already filed returns and could have benefited from the exclusion had it been on the books, according to IRS estimates. The IRS is automatically recalculating those returns and in May will start sending any extra refunds based on those readjustments. The payments will be sent out through December.
A readjusted return calling for more refunded money is welcome news, but taxpayers might want to see if the readjustment puts them in a position to claim even more tax money through an amended tax return.
FUTURE KEY DATES FOR TAXPAYERS
June 15: Federal income-tax filing deadline for Texas, Louisiana, and Oklahoma residents.
In the wake of a February’s devastating winter storm, which sent temperatures plunging and utility bills soaring, leaving many without power, heat and even water for a lengthy stretch, notably in Texas, the IRS pushed back the filing deadline for residents and businesses in these three states. The June 15 deadline also pushes back the estimated payments that taxpayers in this state would have otherwise paid on April 15, according to the IRS.
Louisiana and Oklahoma’s state income-tax deadlines this year have been extended to June 15. Texas has no state income tax.
Beginning in July: Payments scheduled to begin for expanded child tax credit.
Apart from the tax break on jobless benefits, the American Rescue Plan also temporarily boosted payouts under the child tax credit. The credit is now up to $2,000, and $1,400 can be layered into a refund. The relief bill boosts the payout to $3,000 per child, and the age limit now encompasses 17-year-olds. It also pays $3,600 for children under age 6. The credit is completely refundable, too.
In addition to increasing the credit’s value, the bill said the IRS can advance those payments, starting in July, instead of paying families in a lump sum next tax season.
The IRS is working on an online portal where taxpayers can opt out of the advance payments or submit information on a household change, like reporting the birth of a child.
Rettig, quoted earlier in the article, said that the bureau is on track to send out monthly payments starting in July. “If we end up not being on track for some unforeseen situation, we will advise you and the committee,” he said in response to a question from Sen. Sherrod Brown, a Democrat from Ohio.
At a congressional hearing in March, Rettig said the IRS needed people to file their tax returns so the tax-collection agency knew where to send payments.
Oct. 15: Deadline to file returns after receiving an extension.
This is it — the final deadline to submit a federal income-tax return after receiving an extension. Mark your calendar: October 15 is the last important date for taxpayers.
As mentioned earlier, the IRS notes that the way to seek an extension is by filing Form 4868. People can do this via their tax preparer or with tax software. It can also be accomplished through the IRS’s Free File Program.
Rettig continues: “Even with the new deadline, we urge taxpayers to consider filing as soon as possible, especially those who are owed refunds.”
The fastest way to get your tax refund is to file electronically and have it directly deposited — contactless and free — into your financial account.
You can use a bank account, prepaid debit card, or mobile app for your direct deposit and will need to provide routing and account numbers.