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April 13, 2021 Personal Finance

What Does The 2020 Tax Extension Mean?

The federal government extended the tax filing deadline for the second straight year because of the impact of COVID-19 on taxpayers.

Now, you’ll have until May 17, 2021, to get your taxes filed and paid – or a payment plan established. This extension removes any interest or penalties for taxes that are not filed by the typical April 15 deadline.

Who qualifies for the tax extension?
Just about everyone! The extension applies to all tax filers. That means individual, married, married filing separately and everyone in between can take another month to finalize 2020’s finances. The tax extension also encompasses businesses filing commercial taxes. And, the tax extension is good for those dealing with trusts and estates, nonprofit and foundation filings.

In short, if you have to report your taxes to the federal government, the federal government gave you one more month to do it.

How else does this tax extension benefit you?
Besides buying you more time to figure out what you owe or what you’ll get back from Uncle Sam this year, you can also make additional payments to your IRA before the new May 17 deadline – if you haven’t already maxed out your contributions. This only applies to IRA accounts, though, and not any 401(k) accounts.

Watch out – the tax extension is for federal taxes only, unless you are in a handful of states.
This federal tax extension of May 17 only applies to federal taxes. Most states have not moved their tax deadline, meaning state taxes for 2020 are still due by April 15.

That means for Oklahomans state taxes still are due April 15. Only five states – Delaware, Hawaii, Iowa, Pennsylvania and Virginia – have adjusted their tax filings later than the typical April 15 deadline.

What if the extension still isn’t enough time?
If you find yourself needing more time to file or pay what you owe, consider filing a personal extension. You’ll need to fill out and submit Tax Form 4868. With this extension, you’ll have an additional six months. Remember, this allows you to file late, not pay late. Penalties and interest on any money owed will still apply.

If you can’t pay all that you owe in one lump sum when it’s due, the IRS will work with you to set up a payment plan. You can apply online for a payment plan with the IRS, and this will help you avoid penalties and interest you’d incur if you delay payment past the extended deadline.

This article is for educational purposes only. Tulsa FCU makes no representations as to the accuracy, completeness, or specific suitability of any information presented. Information provided should not be relied on or interpreted as legal, tax or financial advice. Nor does the information directly relate to our products and/or services terms and conditions.