By Scott Moser

Is anyone confused about this year’s tax filing deadlines? The IRS’s extension of the 2020 filing deadline to 5/17/2021 for individual tax returns has introduced much confusion. While the extension provides more time to pay your 2020 income tax and make IRA contributions (as outlined later in our newsletter), the extension does not apply to a host of taxes like State income taxes, foreign tax reporting, gift taxes, estimated taxes…

So here is how we are handling the situation.  We extended all 2020 individual income tax returns by the regular due date,  4/15/2021.  That protective extension will cover you for those situations where a May 15th extension is not adequate.  If you owe tax, you still have until 5/17/2021 to make your timely payment.  If you send us your payment before 5/12/2021,  we’ll attach another extension to the payment and send it to the IRS by 5/17/2021.  If we anticipate you will owe tax with your 2020 Form 1040, you should have received instructions from us with the amount you need to pay along with your payment options.  If we did not have sufficient data to calculate your tax due but you provide that data ahead of the deadline,  we’ll contact you before 5/17/21 with instructions.  In either case,  your return has been extended.

If you did not make your first quarter 2021 estimated tax payment,  don’t worry.  You can increase your 5/17/2021 extension payment for 2020 by the amount of the first quarter estimated tax payment.  That should generate a 2020 tax refund that can be applied to 2021.  You may end up paying one month of underpayment interest but we think even that is highly unlikely.  First,  new legislation has been introduced in Congress to extend the 2021 first quarter estimate tax deadline.  Second, we do not think the IRS has the system in place to sort out the source of every payment being applied to 2021 taxes which would be required before interest could be assessed.

Here’s one additional new deadline to note:  if you paid the Obama Health Care tax and/or the net investment income tax in 2017,  you have until 5/17/2021 to file a protective refund claim to preserve your right to a tax refund should the Supreme Court over turn either of these taxes.  We will notify you, if we prepared your 2017 tax return, if either tax applied.  If you are a new client,  you need to review your 2017 return or send us a copy and we’ll let you know if the taxes applied.  Upon request, we’ll prepare a protective refund claim or send you the instructions on filing the claim if you are the adventurous type.