APRIL 15th DEADLINE MAYBE OUT OF SIGHT...
NOT OUT OF MIND
As you now should be aware, the 2020 income tax filing deadline has been extended to May 17th. Taxpayers also have until May 17th to make any federal income tax payments originally due on April 15, without penalties and interest, regardless of the amount they owe.
In extending the deadline to file 1040 returns to May 17th, the IRS is automatically postponing to the same date the time for individuals to contribute to their individual retirement arrangements (IRAs and Roth IRAs), health savings accounts (HSAs), Archer Medical Savings Accounts (Archer MSAs), and Coverdell education savings accounts (Coverdell ESAs).
Most states our clients file in and/or reside in (i.e. NJ, PA, NY, CA, DC, CO, AZ, etc.) have similarly changed the due date to May 17th but you would be well advised to check the filing requirements of each state you might be taxed in. Interestingly Maryland has extended the due date until July 15, 2021 (and for the first quarter 2021 estimate).
There’s no need to file any additional forms to qualify for this automatic federal tax filing and payment relief. Clearly, there are probably many reasons you may not be prepared to file anyway from issues dealing with the Pandemic, to not having the K-1 from the partnership you're in, to waiting for that third corrected 1099 statement your brokerage firm supposedly sent, or to just plain "out-of-sight-out-of-mind" and procrastination. As May 17th approaches, expect us to start “nudging” you as you may need to file a formal extension FORM 4868 if further time is required.
Alas, they have not altered the April 15, 2021 deadline for estimated tax payments due for the first quarter of 2021. These taxes should be paid as taxpayers earn or receive income during the year, either through withholding or estimated tax payments. Estimated tax payments are made quarterly to the IRS and/or states by people whose income isn't subject to income tax withholding, including self-employment income, interest, dividends, alimony, capital gains, or rental income. The quarterly filing due dates are April 15, June 15, September 15 and January 15. If these due dates fall on a Saturday, Sunday or national holiday, the deadline moves to the following Monday.
The IRS does not extend the Report of Foreign Bank and Financial Accounts (FBAR) deadline but we understand the Financial Crimes Enforcement Network (FinCEN) automatically gives an extension until Oct 15, 2021 with no extension required to be filed.
Taxpayers expecting a refund should file electronically. The benefits of filing electronically include:
Electronic filing is safe and secure. It uses modern encryption technology to protect tax returns. The IRS continues to work with states and tax industry leaders to protect tax returns from tax-related identity theft. This effort has helped put safeguards in place to make electronic tax filing a safe and secure option.
It's accurate and easy. Filing electronically helps taxpayers file a complete and accurate tax return. When we file electronically for clients, we will receive an acknowledgement from the IRS telling them their return is accepted as received
.People who file electronically get their refunds faster. When taxpayers file electronically and choose direct deposit for their refund, usually they can get their money in less than 21 days. If they mail a paper tax return, the refund can take six weeks or longer.
Taxpayers who owe, should file by the due date, and pay soon. It's always good to pay as much as possible to minimize interest and penalties.
So many of our clients use our tax return organizers which, during these stressful times, become even more useful. You are encouraged to mail in your completed organizer and supporting documents, drop them off or scheduling an appointment to go over them personally with an accountant. The office is open. Many of you have the available time so why not “get this out of the way now”!
Each January we mail out our “Tax Return Organizer” for our individual tax return clients. As our cover letter explains, although it’s generally blank the first year, we prepare your returns, the beauty of it is that prospectively the computer-generated organizer typically has the prior year’s information printed for a client’s easy comparison. Again, all to hopefully facilitate and streamline the compliance process. Everyone’s different but using the one someone might receive from another accountant, from their use of Turbo tax or even their own personal worksheets may work best for their particular situation. The client’s call. We’d still suggest everyone use an organizer, even if it’s only to serve as an effective “checklist”. A blank organizer is easily retrieved from our website at https:////www.aboandcompany.com/files/2020-New-Client-Complete-Org.pdf