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More Time to File and Pay 2020, Same Deadline to Pay for 2021 Taxes

On Behalf of | Mar 31, 2021 | Firm News

On March 17th, the IRS announced that the annual filing deadline for 2020 personal income tax returns has been extended to May 17, 2021. Additionally, March 30th, they announced that the deadline is also extended to May 17th to contribute to IRAs and health savings account and have it counted for 2020 tax purposes. They also extended the time to claim refunds for 2017 personal income taxes to May 17th. Foreign Trusts and estates with federal income tax filing or payment obligations that file form 1040-NR also have until May 17th to both file and pay.

The deadline for payment of your 2020 income tax bill was also extended to May 17, 2021. However, the IRS has not extended the deadline to make your estimated tax payments for the 2021 tax year. The first quarter payment is due by April 15, 2021. This applies to any individual who earns or receives income that isn’t subject to withholding, such as self-employment income, interest, dividends, distributions, alimony, and rental income. Failure to make these estimated tax payments quarterly can lead to penalties at the end of the tax year.

If you are unsure how to calculate your estimated taxes for 2021, there are a couple of methods. For individuals who have been receiving similar income in prior years, the general rule is to take your total tax from your prior year return and divide that by four. However, many people were out of work or their business was essentially closed for a large portion of 2020 due to the pandemic. For those individuals, if business has started to return to “normal,” they should probably use their 2019 return as a basis for calculating their estimated tax payments. If 2021 is the first year you to need to make estimated tax payments,

or your income in 2021 will be substantially different from your prior year, you can use IRS Form 1040-ES to help you calculate your estimated tax payments.