The Internal Revenue Service is moving the April 15 tax filing deadline to May 17, giving taxpayers an additional month to file tax returns and pay outstanding dues.
The shift applies to individual taxpayers, including those paying a self-employment tax, the IRS said in a statement on Wednesday. The relief doesn’t apply to the estimated tax payments in the first quarter of 2021 that many small business owners owe, however, the agency said. These payments are due on April 15th. The IRS has announced that it will issue further guidelines in the coming days.
“This is still a difficult time for many people and the IRS intends to continue doing everything it can to help taxpayers navigate the unusual circumstances surrounding the pandemic while working on important tax administration tasks,” said IRS Commissioner Chuck Rettig in a statement. “Despite the new deadline, we urge taxpayers to consider filing as soon as possible, especially those who are owed refunds.”
The registration extension gives taxpayers additional freedom to meet their tax obligations in one of the most complicated tax seasons in decades. The change comes following requests from auditors and lawmakers to postpone the due date as new laws and pandemic work changes disrupt taxpayer plans.
The IRS said taxpayers do not need to take any action to take advantage of the May 17 extended deadline. The agency stressed that the delay does not apply to state tax returns, where the deadlines are set by each jurisdiction.
Changes this tax season include short-term changes to the $ 1.9 trillion stimulus package, which went into effect earlier this month, which gives applicants a new tax exemption up to Unemployment Benefit of $ 10,200. The individual income tax return, Form 1040, is also the mechanism for individuals to claim missed recovery payments of $ 1,200 or $ 600 from last year.
Aside from the disruption caused by the pandemic, the changes in tax law mean some applicants will have to wait for updated forms, re-submit their tax returns, or consult a tax advisor on how to proceed if they have already filed.
Read More: US Tax Refunds Fall 32% in Slow IRS Filing Season
House Ways and Means Chairman Richard Neal of Massachusetts, Representative Bill Pascrell of New Jersey – chairman of the supervisory subcommittee on the same body – and Mike Crapo of Idaho, the top Republican on the Senate Finance Committee, had asked Rettig to postpone the filing period.
“This expansion is absolutely necessary to give Americans the flexibility they need in a time of unprecedented crisis,” Neal and Pascrell said in a statement on Wednesday. “While we are happy with this 30-day extension, we will continue to monitor developments in this hectic filing season.”
The IRS, which has the administrative power to postpone tax deadlines without the approval of Congress, extended the filing season last year at the start of the Covid-19 pandemic.
As of early March 2021, the IRS has lagged behind last year’s readings in terms of the number of tax returns filed and processed and the number of refunds issued. The filing season, which began on February 12, started about two weeks later than usual – which contributed to the slump.
The tax expansion also comes as another big job has been entrusted to the IRS: handling a third round of direct payments to households, this time for $ 1,400 each. The IRS said Wednesday it has sent about 90 million payments to date, totaling $ 242 billion.
The delay could also affect H&R Block Inc.’s financial reporting. The company’s fiscal year is expected to end at the end of April.
“The move could bring H&R Block fourth quarter fiscal revenue into the first quarter of $ 500 million,” said Andrew Silverman, a Bloomberg Intelligence government analyst. “While the deadline will likely only be postponed by a month, as opposed to last year’s three-month hiatus, it will be enough to completely disrupt Block 2021 results.”
The company will likely have to spend more on marketing and staffing even during the extended filing season, he said. TurboTax’s parent company, Intuit Inc., will also face some of the higher costs, but tax preparation income is only part of the business and the company’s fiscal year doesn’t end until July 31st, so the date change for them is less annoying. Silverman said.
((Updates with IRS instruction from the first paragraph.)
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