News

TaxWatch: IRS: We’ll delay April 15 tax-filing deadline by one month — but there’s one caveat

0

The Internal Revenue Service said Wednesday it’s pushing the tax-filing deadline from April 15 to May 17.

“This continues to be a tough time for many people, and the IRS wants to continue to do everything possible to help taxpayers navigate the unusual circumstances related to the pandemic, while also working on important tax administration responsibilities,” IRS Commissioner Charles Rettig said in a statement Wednesday.

After a later-than-usual Feb. 12 start to the income tax filing season, the April 15 deadline was arriving too soon, according to accountants, certain lawmakers and advocates for elderly taxpayers. On Tuesday, more than 100 members of the House of Representatives signed a letter asking the IRS to postpone the deadline.

It’s also been a challenging time for the IRS. The tax collection agency was facing mounting pressure for more filing time — especially now that President Joe Biden signed a $1.9-trillion financial rescue bill packed with various tax-code changes.

The IRS has to put those changes into effect, especially one provision that waives federal income tax on the first $10,200 a person receives in jobless benefits. The IRS also has to distribute a third round of stimulus checks. By Wednesday, the IRS had already distributed 90 million economic impact payments, valued at more than $242 billion.

Last year, the IRS pushed the deadline to July 15 also due to the pressures from the COVID-19 pandemic. This year, the IRS was under pressure to push the deadline back pretty much as soon as tax season started.

COVID-related pressures

The IRS received 55.7 million individual income tax returns as of March 5. That’s 18% fewer returns than received on March 6, 2020. But at 22 days into the new filing season, the 55.7 million returns are almost 12% more returns than what the IRS received 26 days into last year’s filing season.

The May 17 deadline is the deadline to pay any taxes owed, and it is the deadline to submit a return. People can still get an extension to Oct. 15, but that’s only more time to send in a return and does not afford more time to pay taxes.

(The IRS can work out installment plans with taxpayers who can’t pay all their owed taxes at once.)

Texas, Oklahoma and Louisiana residents still have a slightly longer timeframe to file their taxes. People in those states were previously given a June 15 deadline to file and pay taxes because of the debilitating winter storm that swept through those states in February.

One caveat to IRS announcement

There is one caveat, however. The IRS notes the extended deadline only pertains to federal income tax payments. It doesn’t affect a state’s income tax deadline.

Last year, however, states also pushed back their own deadlines. Last week, Maryland pushed its state income tax filing deadline to July 15, according to an announcement from Comptroller Peter Franchot.

One provision in the newly-passed rescue plan is making the tax season especially complicated. The law waives federal income tax this year on the first $10,200 a taxpayer receives in jobless benefits. The exemption applies to households making up to $150,000.

By the time the bill became law, many taxpayers may have already filed returns that did not claim the exemption. Tax professionals watching the scenario unfold say it’s best to wait a little bit for the IRS to issue guidance on what the fast-filing taxpayers should do next. They may need to file an amended return.

The IRS has said people who have already filed should wait and not file an amended return just yet. The agency still needs time to determine what these taxpayers should do, it said.

Rep. Richard Neal of Massachusetts, the Ways and Means Committee chair, and Reb. Bill Pascrell of New Jersey, chairman of the oversight subcommittee, said the extra breathing room was badly needed.

They applauded the IRS’s decision to extend the season, calling it “absolutely necessary to give Americans some needed flexibility in a time of unprecedented crisis.”

Victor Reklaitis contributed to this story.

IPO Report: Olo, maker of restaurant-ordering tech, pops 39% from increased IPO price

Previous article

: Citigroup, Wells Fargo, Bank of America urge shareholders to vote against racial-equity audits

Next article

You may also like

Comments

Leave a reply

Your email address will not be published. Required fields are marked *

More in News