Update 3/2/2021: The IRS has extended the Tax Filing Deadline to June 15th for Oklahoma and Texas.
The April 15 tax filing deadline is fast approaching — maybe a little too fast.
Because we’re still dealing with the awful ramifications of COVID-19, Congress has asked the IRS to extend the tax return filing season beyond the April 15 deadline, without requiring taxpayers to file for an extension individually.
Essentially, the House of Representatives asked the IRS to do exactly what it did last year, when the deadline was extended to July 15. It’s been nearly 12 months, but taxpayers continue to face the same challenges that necessitated the original extension. Especially with 2021’s shortened filing season, giving taxpayers a little extra time would provide much needed breathing room.
Yesterday, the IRS took an initial step by extending the deadline solely for Texans and their businesses, after last week’s catastrophic winter storms left millions in the state without power. Texans now have two extra months to file and pay their individual and business taxes. But the House of Representatives hopes that the IRS will not stop with Texas.
The House’s letter also cites internal challenges within the IRS as reason to extend the deadline. There are still millions of 2019 returns left for the IRS to process. With the agency experiencing major staffing issues, it could take months before all of those returns are processed.
And the IRS expects to be ready for a new batch of returns by April 15? The current tax season is already off to a late start. Frankly, the IRS could use an extension as much as we all do.
Will the IRS Actually Grant Congress’s Request to Extend Tax Season?
The short answer? We don’t know yet.
At Boxelder, we’re operating under the assumption that the April 15 filing deadline will still stand, at least for now. Congress’s request isn’t binding; no law requires the IRS to delay the filing deadline.
That said, it’s still quite possible that the IRS will approve the extension. It’s certainly within their interest to do so. If it happens, Boxelder will be ready.
How Would a Tax Season Extension Affect My Third-Round Stimulus Check?
Extending the filing deadline could have real implications for your third-round stimulus check. As with the previous two stimulus checks, the IRS will use your adjusted gross income (AGI) on your most recent tax return to determine if you’re eligible for direct payments, and how much is owed to you. In general, the lower your AGI, the larger your stimulus payment.
So, if you wait until an extended deadline to file your 2020 returns, it’s possible that the IRS will already have sent out the checks. In that case, the IRS would have to use the AGI on your 2019 returns.
This means that filing later could be beneficial if your AGI in 2019 is lower than your AGI in 2020. But if the opposite is true, then you’ll want to file as soon as possible to earn a larger stimulus check.
How Would a Later Filing Deadline Affect My Missing Stimulus Money?
In previous articles, we’ve covered how the IRS sent millions of 2nd-round stimulus checks to the wrong bank accounts.
If you’re still waiting for a stimulus check, or received a smaller amount than what you qualify for, you can claim the money on your 2020 tax returns as a rebate credit.
The rebate credit would either subtract directly from the taxes you owe, or add to your refund. But this means that the longer you wait to file, the longer you’ll wait for your missing stimulus. If you need that money now, consider filing your 2020 returns well before the deadline.
Would the States Change Their Filing Deadlines to Match the Federal Deadline?
It’s very likely that states would extend their filing deadlines to match the federal date. That’s what happened last year.
After the IRS announced the delay, all states that collect personal income tax moved their deadlines to around July 15. That being said, if the IRS does move the deadline this year, make sure to check if your state does the same.
Contact Boxelder Consulting
Tax season is difficult to navigate no matter the year. This year will be even harder. Boxelder’s team of licensed tax attorneys, accountants, and business consultants can help you prepare your taxes, maximize your deductions, and save money.
And if you’re struggling with back tax debt, don’t hesitate to schedule a free consultation or give us a call at 303-317-6111. We’ve helped thousands of clients in Colorado and across the country overcome their tax debt and move forward with their lives. You don’t have to do this alone.