What you need to know about the tax deadline changes

What you need to know about the IRS extension of tax deadlines

Never to be satisfied with the confusion they cause, the IRS set off a wave of anxiety across the tax profession this afternoon. So what was this announcement? Well, the IRS announced that they are moving the April 15, 2021 deadline for individuals to May 17, 2021. Sounds simple right? No, it’s not simple at all.

I’ll let you first take a look at the two announcements released today (March 17, 2021 – Happy St. Patrick’s Day ☘)

So what’s the problem? Well, they only moved the deadline for the individual tax returns on Form 1040 and the related extension payment. However, there are a number of other deadlines that are on April 15, 2021, that were not moved. An important deadline is the first estimated tax payment for individuals. So, individuals are still going to need to calculate their first quarter estimated tax payment and make the payment by April 15, 2021. You usually need the prior year’s tax return to do the calculations for this estimated tax payment, but, now that tax return isn’t due until May 17, 2021.

The other main deadlines on April 15 are the tax returns for calendar year corporations and trusts. These returns can be extended on this date and they also have estimated tax payments due on this date for the current year. There is still a lot that is due on April 15, 2021 and it would have been much simpler from a tax compliance standpoint to move everything due on April 15 to the same new date for this year.

Let’s also not forget that some states already have their federal tax deadlines postponed until June 15, 2021 because of the severe winter storms. These states are Texas, Louisiana, and Oklahoma. Some states are following the IRS deadline change for these states. Currently, Kentucky, Maryland, Oklahoma, and Texas have adjusted their deadlines but mostly for residents of Texas, Louisiana, and Oklahoma.

I think the general consensus in the tax preparation community was that the April 15 deadline would either not be moved at all, or it would be moved to June 15, 2021 so that it is consistent with the states of TX, LA, and OK. Unfortunately, that’s not the case at the moment. But, if you remember what happened last spring in 2020, the IRS kind of rolled more and more deadline items until everything was ultimately moved to July 15, 2020. I don’t think they’ll go to July 15 this year, but I really wouldn’t be surprised if they don’t move more of the deadlines that are currently set for April 15, 2021.

Here are some links to get the current status of the deadlines: