With lots of bills being signed during March, new tax changes will take effect in April 2021. This tax year will be different from what we have seen in the past and alter timelines like last year. Below are what you can expect when filing your 2020 taxes this year. The recent signing of the American Rescue Plan has forced the IRS to take new measures and work through the changes put into place for millions of taxpayers.
Deadline extension for individual taxpayers.
Due to the continued pandemic, the IRS announced in Mid-March that the tax due date of April 15 would be pushed back this year until May 17. No penalties will be applied for taxes filed between April 15 and May 17, and the standard form 4868 is not required. What this means is that the actual filing of your 2020 tax return does not have to be submitted until May 17, allowing taxpayers and their preparers more time to get the paperwork completed and submitted.
Those who still need extensions beyond the May 17th deadline will still need to apply for those through form 4868. October 15 is expected to be the final date for all approved extensions.
Tax payments are still due on the original due date.
If you are scheduled to make a tax payment on April 15, then you are still required to make that payment. The filing deadline does not affect any payments that are required to the IRS. For the self-employed taxpayer and business owners, this deadline is not effective. This misconception could lose you money through fines, interest, and penalties if the deadline is missed.
No current sign of payment extension on the horizon.
While the American Institute of CPAs (AICPA) made an official request to extend the payment deadline, there has yet to be any progress in the matter. CPAs believe that allowing more time for payments would benefit the majority of taxpayers.
Prepare for changes.
While the original extended deadline is helpful, the idea that most taxpayers would benefit is a growing misconception. To avoid any penalties for your 2020 taxes, make sure that their scheduled due dates make all payments. If you believe you will need an extension for filing this year, go ahead and request form 4868.