Tax Moves to Make Before the New May 17 Deadline

03/19/2021

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The IRS recently announced that the due date for filing your 2020 tax return has been moved from April 15 to May 17, 2021. If you’re suddenly feeling a sense of deja vu, it’s justified: last year the IRS moved the deadline for filing your 2019 tax return from the normal April 15 to July 15.

What does this mean to you? Here is a breakdown of some common questions and our answers. Please note that the IRS hasn’t yet released information on several 2020 tax issues, so this information may change.

Does the new deadline of May 17 apply to me? If so, what do I have to do?

The revised deadline applies to taxpayers who file a Form 1040 or 1040-SR, which are the typical forms individual and married taxpayers would use. It does not apply to corporate, partnership or nonprofit tax returns. Those deadlines haven’t changed. For individual and married taxpayers:

  • You do not have to do anything to take advantage of the extended deadline
  • The deadline is automatically extended if you file a Form 1040 or 1040-SR

Can I file for an extension?

Yes, you can, and you have until May 17 (rather than April 15) to do it. If you need more time to complete your taxes:

  • File Form 4868 for an automatic extension to October 15
  • Remember you still must pay what you owe by May 17 to avoid interest and penalties

Has the deadline for submitting quarterly tax payments changed?

No. Your estimated tax payment for the first quarter of 2021 is still due by April 15.

I’ve already set up an automatic payment withdrawal for April 15. Can I change that?

If you’ve already filed your 2020 tax return and authorized an automatic funds withdrawal from your bank account on April 15, you can change the withdrawal date to May 17. You must take action to change the withdrawal date. The IRS won’t automatically change it. What you need to do depends on how you authorized the payment.

  • If you filed your return electronically with the IRS or through a third party such as TurboTax, you can cancel your payment by contacting the U.S. Treasury Financial Agent at 1-888-353-4537.
    • Payment cancellation requests must be made by 11:59 p.m. ET two business days before the scheduled payment date.
    • You must reschedule the automatic payment or mail a check to the IRS.
  • If you used IRS Direct Pay or the Electronic Federal Tax Payment System (EFTPS), you can login to the system you used to change the payment date. You must make the change at least two days before the payment date you scheduled.
    • IRSDirect Pay, click on Look Up a Payment.
    • EFTPS, click on Cancel a Tax Payment.
  • If you scheduled an automatic payment by credit or debit card, contact the card company to change the date.

Has the deadline changed for retirement or health account contributions?

Stay tuned. Typically, contributions for 2020 traditional IRAs, Roth IRAs, and HSAs must be made by April 15. The IRS has yet to explicitly state that the deadline for those types of contributions has been extended as well. The Facet Wealth team will post updated information as soon as the IRS makes an announcement.

Note: if you file Form 4868 for an automatic extension to finalize your taxes by October 15 that does not change these contribution deadlines.

Has my state changed its filing deadline?

No states have announced that they’ve followed the IRS deadline extension, but we expect that many will. Keep an eye on the news in your state for updates or contact your state tax office.

However, because of force storms in February, Louisiana, Texas and Oklahoma previously announced that many of the deadlines for individuals and businesses in those three states had already been extended until June 15. The May 17 deadline does not apply to taxpayers in those states. More information is available here.

Did anything change for people who received unemployment in 2020?

Yes. As part of the American Rescue Plan Act of 2021, otherwise known as the most recent stimulus, the tax treatment was changed for unemployment insurance benefits. Now, the first $10,200 of unemployment compensation is excluded from income for taxpayers who made less than $150,000 in 2020.

If you received unemployment compensation in 2020 and have already filed your tax return, the IRS asks that you not file an amended return. The agency said it will soon announce the steps taxpayers should take.

If you received unemployment compensation in 2020 and haven’t filed your return yet, here are instructions to claim the exemption.

Does it matter how I file?

Yes. If you qualify for a tax refund, we highly recommend filing electronically if at all possible, rather than filing a paper return. Filing a paper return could delay your refund significantly. Make sure you include your banking info on your return. Requesting a paper check could add to the delay.

Are there any last-minute moves I should make before my taxes are due?

Yes. Here are some last-minute tips that can make a huge difference.

Retirement Accounts

Employer-sponsored plans, such as 401(k)s and 403 (b)s, require that contributions be made during the calendar year, so the December 31 deadline for 2020 has passed. (Plenty of time to contribute for 2021, though!) But as noted above, you can contribute to a traditional IRA or Roth IRA up until the tax filing deadline.

Now is a great time to get an extra $6,000 or $7,000 (for those 50 and older) saved for retirement. There are eligibility requirements to keep in mind, so make sure you talk to your Facet Wealth planner or your tax professional.

If you made too much money in 2020 to make a direct Roth IRA contribution, a non-deductible IRA contribution followed by a Roth conversion might be a good move. This can be a little complicated, so talk to your tax professional or planner about whether or not this makes sense and what steps you need to take.

For business owners and the self-employed who have a SEP-IRA or a SIMPLE IRA, you still have some time. For SEP-IRAs, you can still make contributions for tax year 2020 up until your tax filing deadline PLUS the extension. The extension gives you an additional six months to make your contributions for yourself and your employees, if you have any.

For SIMPLE IRAs, the same rules apply, but only for employer matching contributions. Your elective employee deferral contributions are still made during the calendar year (January 1 through December 31). Your matching contributions can be made up until your business tax return deadline and this does include an extension.

Health Savings Accounts (HSAs)

This is something a lot of people miss. If you contribute to your HSA directly through a payroll deduction and you didn’t reach the maximum contribution amount for the year ($3,550 for individuals, $7,100 for families, plus an extra $1,000 for those 55 and over), you can still max it out.

You have to write a personal check to do so, and here’s how it works. Write a check to your HSA custodian (the company or bank where the account is held) for the difference. You will need to report this on your tax return to get the tax deduction.

For example, if your limit for 2020 is $3,550 and you only contributed $2,000, you can still contribute up to $1,550. We recommend that you talk to your employer about how much you can still contribute, how to make the check payable, and where to mail it.

Stay alert for changes

As mentioned above, there are still unanswered questions about some federal and state tax filing deadlines. To keep up with last-minute changes:

  • Watch the news and social media for IRS announcements
  • Check your local news or state tax agency for changes to state deadlines
  • Ask your financial planner or tax expert for the latest information
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