The federal tax deadline has been extended
The IRS announced on Wednesday that the deadline for individual taxes is now extended to May 17 — giving you an extra month to file your return. If you are experiencing a bit of déjà vu, that’s likely because last year they did the same thing, but the deadline was pushed out to until mid-July.
Here are the key points you should know about this new deadline to file your freelance taxes:
· The new deadline of May 17 applies for both payments and filing individual returns (Form 1040 and 1040-R). It is an automatic extension.
· The May 17 date does not apply to corporate, partnership, or nonprofit tax returns.
· It doesn’t apply to your first quarter estimated taxes for 2021 either. They are still due April 15.
· There is not any specific guidance on whether the May 17 deadline applies to contributions for 2020 traditional IRAs, Roth IRAs and HSAs. We will provide additional information when it is available.
· If you need an extension beyond May 17 for your 2020 taxes, you can still file the regular extension form to extend your filing window to October 15. The deadline to submit this form is now May 17, not April 15.
· Remember, if you file for an extension until October 15, you must file by then but you have to pay what you owe by May 17. Otherwise, interest and penalties will start to apply after that date.
· If you live in a state that has already had the deadline extended due to the impact of weather, such as Louisiana, Texas, or Oklahoma, the new May 17 deadline does not apply to you. Defer to the particular guidance for your state for the deadline. In most cases, this is June 15.
· If you have already filed your taxes and want to change your payment date to May 17, you will need to take action to change it. The IRS does not recommend filing an amended return. The IRS states that to cancel payment, you can do so by contacting the U.S. Treasury Financial Agent at 1-888-353-4537. Payment cancellation requests need to be made by 11:59 p.m. ET two business days before the scheduled payment date. You must then reschedule the automatic payment or mail a check to the IRS. If you use the IRS Direct Pay or the Electronic Federal Tax Payment System (EFTPS), both have directions for canceling payments, which needs to be done two days before the payment date.
· If you scheduled an automatic payment by credit or debit card you should contact the card company to change the date.
· If you filed your return already and paid taxes on unemployment benefits (of which $10,200 are now tax-free), you should not file an amended return. The IRS will automatically process refunds for individuals who paid taxes on their unemployment benefits before Congress passed a law making those payments tax-free.
If you can file your taxes and pay by May 17, now is the time to get a head start and complete your individual taxes. The IRS is already behind in processing returns and this extension is likely going to add to delays in your return and any potential refund being processed. Filing sooner rather than later, especially if you are anticipating a refund, is the best way to expedite having that cash back in your bank account — even before the extended May 17 deadline arrives.
Jonathan Medows is a New York City-based CPA who specializes in taxes and business issues for freelancers and self-employed individuals across the country. He provides tax, accounting and business articles for freelancers on his website, http://www.cpaforfreelancers.com, which also features a blog and a comprehensive freelance tax guide. Please note, due to the high volume of inquiries in regard to COVID-19, Jonathan is not able to respond to individual requests for information at this time.