By Justin Smith
For the Opelika Observer
The Internal Revenue Service announced that it will delay this year’s filing deadline by one month from April 15 to May 17. This is the second year the IRS has delayed the filing deadline, following last year’s three-month delay resulting from COVID-19. The tax payment deadline has also been delayed to May 17 to provide taxpayers with relief related to the ongoing COVID-19 pandemic. The announcement further provided that no interest, penalties or addition to tax for failure to pay federal income taxes will occur between April 15 and May 17, 2021.
The Alabama Department of Revenue also announced that it will follow the IRS extension, although interest will accrue beginning after April 15 for unpaid accounts.
Taxpayers typically file Form 4868 (often electronically) to request an extension to Oct. 15, which is the final deadline most years. It is still highly recommended that taxpayers wishing to delay their filing until later in the year still file for their extension by April 15.
Typically, requesting an extension to file does not provide an extension to pay your taxes. Interest and penalties begin accruing no later than April 16 most years, even for taxpayers who extend their filing date.
Further, the filing extension does not extend to corporations and partnerships, which must still adhere to the recently-passed March 15 deadline (or Sept. 15, if extended).
As of the most recent March 12 report from the IRS, 66 million returns had been filed, down 13% from 76.1 million filed through the same timeframe in 2020. Of the returns processed to date, 42 million (down from 59 million in 2020) returns had refunds totaling $126 billion, or approximately $2,967 per turn (approximately on par with 2020).
In addition to the later start for the IRS to begin processing returns this year, taxpayers are also evaluating delaying their filings in light of the recently-passed American Rescue Plan Act, which provides up to $1,400 per individual in a third round of stimulus payments.
My advice is that taxpayers who normally receive a tax return should proceed with filing their tax returns as soon as possible, as no delays have been announced in the processing of returns or distribution of tax refunds. This is especially true for taxpayers who have received their stimulus payments already.
Taxpayers who normally face a tax bill (or who expect to) should also consider filing their tax returns promptly so that they can plan for their taxes due, but still have additional time to actually remit payments.
Taxpayers should keep in mind that many accountants, including me, have multiple options available to clients to help them file their taxes. We can conduct virtual meetings, use secure online portals to collect and obtain tax documents, collaborate via email, exchange text messages and deliver invoices electronically for payment. Those who prefer to provide paper tax documents can still do so.
Please reach out to me or your tax professional if you have further questions about your specific tax situation during this time.
Justin Smith is a licensed Certified Public Accountant in Opelika, specializing in individual and small business tax and accounting. He can be contacted at 251-209-2579 or Justin@JSmithCPA.net. His Web site is www.jsmithcpa.net.