2021 Tax Deadline Changes Summarized

[Updated March 31st, 2021]

This week the IRS released IRS Notice 2021-21 with a summary of all the changes for tax deadlines historically on April 15th. Now, many of the deadlines have been changed to May 17th, but it’s more than just your form 1040.

Unless you were living in a cave the past two weeks, most Americans were already aware of the fact that the 1040 filing deadline was changed from April 15th to May 17th. But there were still questions unanswered on whether or not contribution deadlines for IRAs, HSAs, and others would also be extended.

Today we now have a full picture of all the deadline changes with the IRS and new legislation regarding the PPP. It’s time to do some planning!  

Has the Deadline for the PPP Application officially changed?  

Yes. The Paycheck Protection Program (PPP) application deadline is formally changed from March 31 to May 31. With the passage of the PPP Extension Act of 2021, signed by President Biden into law on Tuesday, March 30th, business owners have an additional 60 days to submit their Applications. 

The new law also provides an additional 30 days for the SBA to finish processing applications received by May 31. View a summary of the Application procedures on the SBA website here, and learn if you still may qualify for more assistance.

When do I have to file my 1040 Tax Return?

The filing deadline for 2020 1040 Individual Tax Returns is now May 17th. As I stated above, this is generally old news. IN MID-MARCH, the IRS issued a News Release, providing for this automatic extension that individual taxpayers need not file any additional forms or requests to receive this Special Extension.

Do I have an extra month to PAY my taxes too?

Yes! The extension applies to both filing and payment. You don’t have to pay or file until May 17th.

If I can’t pay my taxes by May 17th, can I still file an extension?

Yes, definitely! You can file for an extension that allows you to file your tax return until October 15th by using form 4868. HOWEVER, it IS NOT an extension to pay!! You will still pay interest and ‘some’ penalties between the period of May 17th and October 15th (or if you file and pay sooner).

But please still FILE AN EXTENSION! If you don’t…the penalties and interest for ‘not filing an extension during this period of time are far worse than just not paying.

In fact, if you owe taxes on your 1040 and foresee that you won’t be able to pay by May 17th, see my other article: “What To Do If You Can’t Pay Your Taxes By May 17th?”

Does this extension to May 17th apply to my quarterly deposits?

No. It is IMPORTANT to note that this Special Extension DOES NOT apply to estimated first-quarter 2021 tax payments that you may owe. If you have a payment due this quarter, the IRS is still expecting that on April 15th!

When is the deadline to contribute to my 2020 retirement accounts? 

Yes, and it’s Great news! The special extension to May 17th ALSO applies to Traditional IRAs and Roth IRAs. Taxpayers now have until May 17th to contribute these special retirement accounts and still have them apply to 2020. On Monday, the IRS announced that the deadline for 2020 contributions to retirement and HSA accounts would be extended to May 17th. Learn more in Mat Sorensen’s article: “Contributions to IRAs and more Changed to May 17th”.

When is the deadline to contribute to my HSA for 2020? 

Again, Great news! Yes. The special extension to May 17th ALSO applies to Health Savings Accounts (HSAs). Taxpayers now have until May 17th to contribute to their HSA (if they qualify) and still obtain a tax deduction for 2020. The deduction could be as much as $3,550 for single individuals and $7,100 for those filing as married and head of household. Learn more in more article “The Power of the Health Savings Account.”

Can I Still Contribute to an Educational Savings Account for 2020? 

Yes. Parents and Grandparents can still make a contribution up until May 17th and have it apply to 2020. These accounts have been referred to by different names, but the most common being an ESA (Educational Savings Account), an Educational IRA, or Coverdell IRA. They’re ALL the same thing and a fantastic strategy to save for college!! Much better than a 529, in my opinion. The contribution is up to $2,000 per beneficiary and can be invested in a host of assets, including cryptocurrency. Learn more in my article: “The Hidden Benefits and Power of an Educational IRA.”

What about My State Tax Return Deadline?

Beware! This Special Extension to file your 1040 tax return until May 17th ONLY applies to your PERSONAL FEDERAL 1040 return. State deadlines are not always the same as federal deadlines, so you need to make sure and double-check with your State regarding any extensions to the deadline. You can find information on your individual state deadlines here.

IF YOU LIVE IN LOUISIANA, TEXAS, OR OKLAHOMA:

Many of your individual and business STATE tax deadlines have been extended to June 15th due to emergency declarations from the storms earlier this year. However, your federal returns are still due on May 17th.

What if I can’t pay my taxes by October 15th?

If you aren’t able to pay your taxes by October 15th, you’re in a whole new set of rules and options. Many people think they can ‘settle for pennies on the dollar,’ or if they don’t file, the penalties won’t change, OR the extension covers them past October 15th. ALL of those assumptions are wrong. Please see my article “What to do If I can’t Pay My Taxes by October 15th?”

I hope this helps answer your questions about this year’s tax season! As always, if you are in a predicament and missed a deadline, or owe any taxes whatsoever, get professional help and be cautious of radio or tv ads that ask for money upfront. Please contact an attorney or CPA in our office to discuss your situation with you if you need further assistance.

* To sign up for Mark’s weekly Free E-Newsletter and receive his Free E-Book “The Top 10 Best Tax Saving Secrets Everyone Should Know” visit www.markjkohler.com.

Mark J. Kohler is a CPA, Attorney, co-host of the Radio Show “Refresh Your Wealth” and author of the new book “The Business Owner’s Guide to Financial Freedom- What Wall Street isn’t Telling You” and, “The Tax and Legal Playbook- Game Changing Solutions For Your Small Business Questions.”  He is also a partner at the law firm Kyler Kohler Ostermiller & Sorensen, LLP, and the accounting firm K&E CPAs, LLP.