The IRS announced on Wednesday that it is extending the 2020 tax filing deadline by one month, effectively giving taxpayers up until May 17th to file their 2020 returns. This marks the second consecutive year where the deadline to file has been extended and it serves, yet again, as another reminder of the chaos brought on by the year 2020. The delay to file was lobbied for by several agencies including the American Institute of Certified Public Accountants (AICPA) and despite heavy resistance by the IRS who pushed back all the way through February of this year, the extension was finally granted.
At this point, little information is available regarding the extension, but here are some things you may want to consider as you plan the filing of your personal return.
- When to File? Although the deadline has been extended, that does not necessarily mean that you should cancel your plans to file by April 15th. Filing your return on or before the normal filing date can provide you with more time to prepare and organize your 2021 tax planning and, if you’re expecting a refund of taxes that you overpaid in 2020, filing sooner rather than later will be beneficial for you, to say the least. As always, be sure to consult with your tax preparer in order to determine the best time for you to file.
- What if I Owe? Because the filing deadline is being pushed back to May 17th, you can delay the payment of any taxes you owe until that date which, for many, provides some relief as they pull together the funds needed to pay Uncle Sam. At Capstone, we highly recommend, whether you owe taxes or not, that you consult with your tax preparer or CPA in advance to ensure your tax obligation is paid on time.
- What About 2021 Quarterly Tax Estimates? So far, the IRS has not commented as to whether there will be any changes to the 2021 quarterly tax estimate due dates and, without any further guidance, taxpayers who make estimated payments should plan on making their 1st quarter estimated payments by the normal due date – for the first quarter of 2021, estimated payments are due on April 15th.
- Do I have until May 17th to make a 2020 IRA or HSA contribution? There has been no specific guidance regarding IRA and HSA contributions yet, however, as part of COVID-19 relief efforts, the IRS did extend contribution deadlines for the 2019 tax year so it seems very likely that the same rules will apply for 2020. That said, there has been no word at this point that the contribution deadline will coincide with the May 17th extension, so making your contributions sooner than later would be the safest way to receive credit for them. Again, you should contact your tax advisor or financial planner for more information regarding retirement accounts and HSAs.
If you have questions about how the new filing deadline may affect your personal financial plan please feel free to call the advisors at Capstone Wealth Management Group at (570) 587-7800 (office) or at 888-587-7526 (toll free).
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. This material general information only and not intended as tax advice