What Did & Didn’t Get Postponed for Tax Day 2021?

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elementscpa-2020-tax-day-extension-worksThis year’s Tax Day postponement to May 17 works differently than last year’s – scan below to ensure you take action at the right time and prevent surprises coming back to catch you. (Last updated 7 Apr 2021 at 09:12 ET)

 

IRS – Federal Implications for April 15 / May 17

The IRS announced this year that 2020 individual returns and payments normally due April 15 would now be due May 17 instead.

Seems simple, but here’s things to know:

  • The 1q 2021 estimated tax payment did not get moved and is still April 15. Not only could this catch you off-guard, it further complicates tax returns that carry forward excess refunds to the next year as part of their first quarter estimated: unless the IRS revises the postponement, those carryforwards would now be late.
  • C-corp 2020 returns normally due April 15 did not get moved either.
  • S-corp and Partnership returns normally due March 15 were completely unaffected by the postponement – either they needed to be filed, or an extension submitted, by March 15.
  • The IRS clarified on March 29 that the deadline for 2020 contributions to IRAs, HSAs, MSAs, and ESAs were also postponed to May 17. (Originally these were not postponed.)
  • On March 29, the IRS also clarified the refund expiration deadline for 2017 tax returns is also being moved to May 17: so any refund on an unfiled or yet-to-be-amended 2017 return will evaporate on this new later date. (Originally this had not been postponed either.)

 

State Implications for April 15 / May 17

Of course, the other half of the story is the states: Each sets their own tax rules, so each state has to independently decide if and how it moves its own deadline. Over time most have conformed to the IRS, but there can be differences or nuances, so be sure to confirm your state’s particular details. Here’s the breakdown of a few states as of this writing:

  • Maryland moved the filing deadline for individual, corporate, pass-through, and fiduciary returns to July 15. // Maryland also moved the 1q and 2q 2021 estimated payments to July 15. (This is essentially the same policy from last year.) // Pass-through business owners wanting to elect the new Maryland business-level tax for 2021 should make business estimated tax payments by physical check accompanied by 2021 Form 510D under your federal EIN. (At the time of this writing, online payment was not yet available through the bServices BillPay system.)
  • District of Columbia moved the filing deadline for individual, corporate, unincorporated, and partnership returns to May 17. // DC did not move 2021 estimated payment dates: 1q 2021 is still due April 15.
  • Virginia moved the individual deadline from May 1 (their normal due date) to May 17, but will still charge interest for late payment. Business returns were unaffected. // Virginia did not move 2021 estimated payments: 1q 2021 is still due May 1.
  • Pennsylvania moved their individual deadline to May 17. // Pennsylvania did not move 2021 estimated payments: 1q 2021 is still April 15.
  • California moved their individual deadline to May 17. // California did not move 2021 estimated payments: 1q 2021 is still April 15.

As more time passes, most states conform to the IRS schedule and pattern of only individual returns and not 2021 estimated payments. As of this writing Arizona, Hawaii, and New Hampshire were not conforming. Here’s a complete list compiled by the MACPA and another by the National Taxpayers Union Foundation.

 

Reasons you May Want to Extend

Whether April 15 or May 17, there may be good reasons you want to extend your tax filings this year, even if that’s not your usual routine — In our Member-only Insights e-Letter last month, we reviewed scenarios such as:

  • Both the federal and state governments are working through a patchwork tax law to address the atypical flood of federal, state, local, and private COVID-relief funds that were received by small businesses. Normally grants and forgiven loans are fully taxable money, but Congress and different states have been making attempts to exempt particular programs as well as address whether the expenses paid with exempted funds are deductible. Some has been clarified, but especially at the state and local level, legislation and guidance is in progress or hasn’t even been taken up yet. Delaying on filing your business returns can mean the difference in thousands of dollars in lower taxes.
  • A similar thing is happening for individuals who received unemployment benefits. Normally fully taxable, Congress just exempted a limited amount of unemployment in its law signed March 11 (half-way through tax season), some states exempted their own either fully or partially for state purposes, some are pending, while others haven’t considered. If you received unemployment and there’s unclear guidance or pending state forms for your particular filings, you may benefit from waiting.
  • This is also true for the Advanced Premium Tax Credit — That’s the federal subsidy which helps cover health insurance premiums for qualifying individuals. Under the law signed March 11, a change means  that for 2020 those premiums don’t have to be repaid if it turns out you don’t fully qualify on your tax return. Which is good news, except as of this writing the IRS had yet to release the new form and no word on when it would be available.
  • If your pass-through business had a PPP loan and ran a loss for 2020, you may want to wait and see if more IRS guidance is issued to clarify when you can count the PPP loan against your owner basis — If you’re allowed to claim it in 2020 regardless of when it’s forgiven, it may mean the ability to reduce your 2020 taxable income and by consequence, your taxes.

One reason you may want to not delay too long is if your 2019 income excludes you from the third stimulus check and/or child tax credits, but your income dropped below the $80k single/ $160k joint/ $120k head of household cap. While the first round of these payments have already gone out, the new law provides for a second round of payments as long as your return is filed by August 15. (Of course, the stimulus payment can ultimately also be claimed on your 2021 tax return filed next year as last backstop.)

(Note: All Active and Support level members will be extended automatically if needed — Other member levels can request our team submit an extension for you, or to self-file check out our extension blog post.)

 

Non-Income Tax Implications

One thing we saw last year is other governmental filings get delayed as well: things like state Annual Reports, Personal Property Tax returns, etc. For the most part, states to do not appear to be moving these due dates, so be sure to keep in mind that just because your tax return deadline may have moved, other forms may still be due in April.

 

Helpful but Confusing

Postponing Tax Day to May 17 will be helpful for many people, but it’s dangerous to assume everything moved the same way it did last year. Double check this post and also reach out to our Tax Designers to be sure you don’t end up missing a different deadline unintentionally. And remember that an extension still needs to be filed if you plan to file after the new due dates (see our extension blog post for details).