Important Update About the Tax Deadline
The Internal Revenue Service (IRS) recently announced that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. The state of Vermont has just announced that the Vermont personal income tax filing due date for tax year 2020 is also extended to May 17, 2021.
The extension gives taxpayers much needed breathing room to meet their tax obligations in what is becoming one of the most complicated tax seasons in decades.
The complications are a direct result of the unusual circumstances related to the pandemic including:
- Tax season was delayed from the start as the IRS began to accept and process tax returns on Feb. 12, which was a two-week delay from previous years.
- Last-minute amendments to the $1.9 trillion stimulus bill signed into law earlier this month that give filers a new tax exemption on up to $10,200 of jobless benefits. The individual tax return, Form 1040, is also the mechanism for people to claim any missing $1,200 or $600 stimulus payments from last year.
- The extension gives the IRS time to issue much needed guidance on the recent amendments.
- The tax law changes will mean some filers will have to wait for updated forms and resubmit their returns.
- State guidance is still pending on the many federal tax law changes that have occurred since 2019. Several states have not addressed how those changes will affect their state taxes for 2020 – including Vermont.
It is not necessary to file an extension to take advantage of this extended due date. It should be noted that you will need to file a formal extension by May 17 if you want an October 15 extended date, accompanied with any payment due.
- Penalties assessed for the period from April 15 to May 17 will be abated automatically. However, penalties associated with any underpayment of your prior 2020 estimated tax payments are not abated.
IRA and HSA contributions have also been extended until May 17. They are to be contributed by the original filing due date of your personal return, which is now May 17.
It is important to note that this extension does not apply to estimated tax payments that are due on April 15, 2021. These payments are still due on April 15. Taxes must be paid as taxpayers earn or receive income during the year, either through withholding or estimated tax payments and this applies to both federal and state estimated payments.
- If you have an amount that you are anticipating paying, you can go directly to the IRS website and the Vermont pay website to pay your estimates electronically online.
Vermont Extended Deadline Rules:
Vermont has finalized that income tax filing due dates for the following taxes have been extended from April 15, 2021 to May 17, 2021:
- Vermont personal income tax
- Vermont Homestead Declaration and Property Tax Credit Claims
This means taxpayers can file and pay these taxes prior to May 17, 2021 without any penalty or interest.
Davis & Hodgdon Associates CPAs has been assisting individuals and businesses throughout Vermont and New England for more than 30 years so please reach out to us in Williston (802-536-1831) or Rutland (802.775.7132) to talk or schedule a meeting. You can also email us at firstname.lastname@example.org. As always, we are dedicated to carefully reviewing each and every tax return to ensure your return's accuracy and uncovering all possible tax savings opportunities. Please reach out to us if you have any questions.