The impact of the COVID-19 pandemic has caused delays, reduction in service, and shutdowns for many California and Texas businesses over the past year. The combination of preventative measures through forced closures, social distancing, and reduced operating capacity has made things difficult for many. However, it turns out the pandemic is also impacting the ability of many government agencies as well. This is especially true for the IRS which has a large backlog of returns and other matters unresolved. The situation was made worse when the American Rescue Plan Act of 2021 was implemented because of a retroactive 2020 tax change for individuals and the need to send out economic stimulus payments in a short time period. The demand for resources and extra time needed recently prompted the IRS to extend the federal individual tax filing deadline. Once announced many states followed suit including California. To help clients, prospects, and others, JLK Rosenberger has provided a summary of the key details below.
Federal Individual Filing Deadline
On March 17th, the IRS announced an automatic filing extension for individual taxpayers. Now, these taxpayers have until May 17th, a 32-day extension, to file their 2020 tax return. The extension applies only to the filing date and will not impact extensions. No interest, penalties, or fees will accrue between April 15th and May 17th for any return or payment postponed by the change. It is important to note the extension does not apply to estimated tax payments, information returns, and any other type of federal taxes due on April 15th.
California Individual Filing Deadline
In alignment with the extension issued by the IRS, the California Franchise Tax Board (FTB) announced a similar extension. This means that California individuals that file Forms 540, 540 2EZ, and 540NR including PIT composite returns have an additional 32 days, until May 17th, to file outstanding individual returns. It is important to note taxpayers who pay 2020 taxes by the new deadline will not be subject to penalties, fines, or interest. Finally, first-quarter estimated tax payments were not included in the extension. Therefore, estimated taxes must still be paid on or before April 15, 2021. The extension is automatic, and taxpayers do not need to contact the FTB to qualify.
Texas Individual Filing Deadline
The state tax filing deadline had been previously extended to June 15, 2021, because of the weather disaster which cut basic services such as electricity and power to many residents. This means that individual taxpayers will have the same 60-day extension on state tax filing requirements which matches federal guidance. According to the Texas Comptroller of Public Accounts, there will be no interest, fees, or penalties assessed on outstanding 2020 taxes owed assuming payment is received, on or before, June 15, 2021.
The deadline extension is welcome news for individual taxpayers as it provides extra time to prepare the 2020 taxes. Given the existing Texas extension and California conformity with federal changes, individuals now have extra time to file and pay outstanding taxes due. If you have questions about the filing extensions or need assistance with another tax issue, JLK Rosenberger can help. For additional information call us at 949-860-9902 or click here to contact us. We look forward to speaking with you soon.