money IRS delays tax deadline by one month to May 17
The Internal Revenue Service extended the tax deadline for filing returns and making tax payments to May 17 from April 15, giving taxpayers additional time after mounting pressure from lawmakers and organizations.
'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," said IRS Commissioner Chuck Rettig in a statement on Wednesday. "Even with the new deadline, we urge taxpayers to consider filing as soon as possible, especially those who are owed refunds."
The IRS and Treasury Department said the extension is for individual taxpayers including those who pay self-employment tax. Taxpayers who postpone their federal income tax payments won't incur penalties or interest on amounts owed as long as they pay by May 17.
The extension does not apply to estimated tax payments that are due on April 15, 2021, however. These payments are still due on the that date.
The IRS plans to publish more formal guidance in the coming days.
“This extension is absolutely necessary to give Americans some needed flexibility in a time of unprecedented crisis,” House Ways and Means Committee Chairman Richard E. Neal (D-MA) and Oversight Subcommittee Chairman Bill Pascrell, Jr. (D-NJ) said earlier Wednesday in a statement, confirming the agency had made the decision to extend the deadline after numerous media reports.
“Under titanic stress and strain, American taxpayers and tax preparers must have more time to file tax returns. And the IRS itself started the filing season late, continues to be behind schedule, and now must implement changes from the American Rescue Plan," Neal and Pascrell wrote.
Read more: Here's how you should use your tax refund in 2021
This year, the filing season opened on February 12, a delayed start compared with previous years, leaving Americans with less time this season to prepare their returns. In addition to disruptions caused by the pandemic, taxpayers and the IRS are dealing with numerous tax changes this season after the government put in place various stimulus provisions to provide financial relief during the pandemic.
Both Republican and Democratic lawmakers have been calling on the Internal Revenue Service to extend the April 15 due to the new stimulus provisions and the late start of the filing season. In 2020, the tax filing deadline was moved to July 15 due to the health risks and economic challenges caused by the pandemic.
"We are still grappling with the massive economic, logistical and health challenges wrought by this devastating pandemic," Rep. Jamie Raskin wrote in a letter obtained by Yahoo Money and signed by over 100 Democratic and four Republican representatives before news of the extension broke. "Millions of stressed-out taxpayers, businesses and preparers would appreciate an extension of the deadline to file their 2020 tax returns."
Republican Senator Mike Crapo from Idaho also had joined the calls for an extension.
Read more: Taxes: Here's how to know if you should itemize
"The various coronavirus relief programs created over the last year, including the bill signed into law just last week, have resulted in a large amount of extra paperwork for taxpayers this year and have required tax preparation firms to constantly update their systems," he said on Wednesday in a statement to Yahoo Money. "The IRS should strongly consider extending the filing deadline, giving taxpayers and businesses more certainty and time to receive accurate guidance and file returns properly."
AARP and AICPA, the largest member association representing accountants, both have called for a tax deadline extension.
The $1.9 trillion stimulus deal recently signed into law included a tax exemption for the first $10,200 of unemployment benefits; any benefits above that threshold would be taxable. The break would apply to the 2020 tax year and only for households making up to $150,000.
Along with the newly-added tax break from the recent stimulus, taxpayers face other key changes. They can claim the first and second stimulus check as a Recovery Rebate Credit if they didn't receive the payments or the correct amount. Under the $900 billion stimulus passed in December, taxpayers can use either their 2019 or 2020 income to calculate their Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC).
Read more: Taxes 2021: How to avoid scams this filing season
This year, taxpayers who take the standard deduction can write off up to $300 in charitable donations, thanks to CARES Act. And under the government spending bill, medical expenses now must exceed only 7.5% of adjusted gross income to take this itemized deduction.
It's also unclear whether states will follow suit and extend their state tax deadlines.
Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova
Read more:
Senate passes Biden's $1.9 trillion relief package including $1,400 stimulus checks
Jobs aren't bouncing back for Black Americans — and it could be worse than reported
Read more personal finance information, news, and tips on Cashay
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and Reddit.
