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IRS: We will delay April 15 tax filing deadline by one month – but there is a caveat

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The Internal Revenue Service said on Wednesday it was extending the tax filing deadline from April 15 to May 17.

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

After a later than usual start to the tax season on February 12, the April 15 deadline was approaching too early, according to accountants, some lawmakers and advocates for older taxpayers. Tuesday, more than 100 members of the House of Representatives signed a letter ask the IRS to extend the deadline.

It was also a difficult time for the IRS. The tax collection agency was facing increasing pressure for more filing time – especially now that President Joe Biden has signed a $ 1.9 trillion financial bailout bill containing various tax code changes.

The IRS must implement these changes, especially a provision that waives federal income tax on the first $ 10,200 a person receives in unemployment benefits. The IRS must also distribute a third set of stimulus checks. As of Wednesday, the IRS had already distributed 90 million economic impact payments, valued at more than $ 242 billion.

Last year, the IRS extended the deadline to July 15 also due to pressures from the COVID-19 pandemic. This year, the IRS was under pressure to extend the deadline as soon as tax season began.

COVID-related pressures

The IRS has received 55.7 million personal income tax returns as of March 5. That’s 18% fewer returns than those received on March 6, 2020. But at 22 days after the start of the new production season, the 55.7 million returns represent nearly 12% more returns than what the IRS received 26 days in last year’s filing season.

The May 17th deadline is the deadline for paying taxes owed, and it’s the deadline for submitting a return. People can still get an extension until Oct. 15, but that’s only more time to file a return and doesn’t allow more time to pay taxes.

(The IRS may set up installment plans with taxpayers who cannot pay all of their taxes owed at once.)

Texas, Oklahoma and Louisiana residents still have a slightly longer time to file their taxes. Residents of these states previously had a June 15 deadline to file and pay their taxes due to the debilitating winter storm that swept through those states in February.

A caveat to the IRS announcement

There is, however, a caveat. The IRS notes that the extended deadline only affects federal income tax payments. It does not affect a state’s income tax deadline.

Last year, however, states also extended their own deadlines. Last week, Maryland extended the deadline for filing state income tax to July 15, according to an announcement from controller Peter Franchot.

A provision in the recently adopted bailout makes tax season particularly complicated. The law waives federal income tax this year on the first $ 10,200 a taxpayer receives in unemployment benefits. The exemption applies to households earning up to $ 150,000.

By the time the bill became law, many taxpayers may have already filed returns that did not request the exemption. Tax professionals watching the scenario unfold say better to wait a bit for the IRS to issue guidelines on what quick-reporting taxpayers should do next. They may need to file an amended return.

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

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

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

Victor Reklaitis contributed to this story.


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