To Our Valued Clients and Friends,
On Wednesday March 17, 2021, the Treasury Department and the Internal Revenue Service (IRS) announced it will automatically extend the federal income tax filing due date for individuals for the 2020 tax year from April 15, 2021, to May 17, 2021. The extension for both filing and payment will apply to some, but not all, taxpayers. State tax deadlines, when applicable, will remain up to the individual state.
The IRS will continue to announce guidance in the coming days and weeks. We will share additional information as it becomes available. As of the March 17th announcement, individual taxpayers can postpone federal income tax payments for the 2020 tax year traditionally due on April 15th, to May 17th, 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 taxes paid by this date.
For individual taxpayers who need additional time to file beyond the May 17 deadline, a filing extension can be requested until October 15. However, filing an extension does not grant additional time to pay taxes due. To avoid interest and penalties, federal income tax due must be paid by May 17, 2021.
While the new deadline will apply to many, there are some exceptions. Unlike the tax extensions offered in 2019, the May 17th deadline does not extend 2021 federal estimated tax payments due on April 15th for small business owners and individuals who pay estimated taxes. In addition the following April 15th filings remain unchanged for 2020:
Please submit your complete 2020 tax documentation to our office as soon as you are able. We are asking all clients to submit their documents through our secure portal, mail them to PO Box 7430, Reno, NV 89510, or drop them off at our office.
For those who are due a refund, we recommend filling as soon as possible. As was also the case last year, utilizing the e-file option as opposed to submitting a paper return will enable a faster response and refund by the IRS. If you are aware you will need an extension past the May 17th deadline, please let us know at your earliest convenience so any amount owed can be estimated and paid by May 17 to avoid interest or penalties.
As always, if you wish to discuss the impact of these changes on your particular situation or if you have any questions, please give us a call.
The Clausen & Company Team