This article was updated on October 14, 2021.
If you are an individual freelancer, sole proprietor, or business owner operating under another entity type in New York, New Jersey, and Pennsylvania, you may have until January 3, 2022, to file individual and business tax returns and make estimated tax payments, if you have been affected by Hurricane Ida. In addition to the filing deadline being extended, the IRS is also abating late payment fees and penalties related to these tax payments, but interest will still be charged based on the original due date.
This relief also postpones various tax filing and payment deadlines starting on September 1, 2021. If you are an individual freelancer or business affected by Ida, you will have until January 3, 2022, to file returns and pay any taxes that were originally due during this period. If you are an individual freelancer who had a valid extension to file their 2020 return by October 15, 2021, you will now have until January 3, 2022, to file it. However, tax payments related to these 2020 returns were due on May 17, 2021, and those payments are not eligible for this relief.
The January 3, 2022, deadline also applies to quarterly estimated income tax payments due on September 15, 2021, and the quarterly payroll and excise tax returns normally due on November 1, 2021.
Businesses with an original or extended due date also have the additional time including calendar-year partnerships and S-corporations with 2020 extensions due on September 15, 2021, and calendar-year corporations with 2020 extensions due on October 15, 2021.
Freelancers in these designated disaster areas qualify for Hurricane Ida tax relief:
The IRS is offering this relief to any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual or public assistance. In New York, this currently includes the following areas in New York:
· New York
· Richmond and Westchester Counties
In New Jersey, it includes:
· Passaic and Somerset Counties
In Pennsylvania, it includes:
The relief applies to taxpayers in Ida-impacted localities subsequently designated by FEMA. As such, in other parts of these states, taxpayers will automatically receive the same filing and payment relief. The current list of eligible localities is available on the disaster relief page on IRS.gov.
New York State has also extended its deadline for tax returns originally due on October 15. Individual returns and estimated payments are now due January 3, 2022. (For the full list of postponed deadlines, see this release from the NY Department of Taxation.)
Tax relief is automatic for individual freelancers and businesses affected by Hurricane Ida, but interest still applies for late tax payments. The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, interest will still be in charged on payments past the original deadline.
If you received a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, call the number on the notice to have the penalty abated.
In addition, the IRS stated that it, “will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area.” If you are a freelancer qualifying for this you can contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.
If you as an individual, or through your freelance business in a federally declared disaster area, suffered uninsured or unreimbursed disaster-related losses you can choose to claim them on either the return for the year the loss occurred (in this instance, the 2021 return normally filed next year), or the return for the prior year (2020). Be sure to write the FEMA declaration number (4614 for New Jersey, 4615 for New York, 4618 for Pennsylvania) on any return claiming a loss.
For more information and updates, visit the IRS disaster relief page has details on other returns, payments, and tax-related actions qualifying for the additional time.
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 free newsletter, blog and a comprehensive freelance tax guide.