The Internal Revenue Service extended the 2019 federal income tax filing and payment deadline for three months, from April 15 to July 15, 2020. The extension was given in response to the global coronavirus pandemic sweeping the United States.
The new deadline was automatic for all taxpayers, who also had until July 15 to pay any taxes that would have been due on April 15. Payments could be deferred without penalties and interest, no matter how much was owed.
The filing deadline for 2020 tax returns in 2021 was extended as well to May 17, 2021.
With unprecedented business closures and stay-at-home orders in effect in most U.S. states, joblessness surged amid an economic collapse triggered by the COVID-19 pandemic.
The Tax Day extension was one of a number of several government relief measures, including expanded unemployment insurance and stimulus checks for most Americans.
Filing a Return To Get a Stimulus Payment
You should have received a stimulus check or economic impact payment as established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. If you hadn’t yet filed your 2019 tax return at the time these payments were issued, the IRS used information from your 2018 return to calculate the payment.
The IRS launched a second online tool for nonfilers that allowed taxpayers to register for a CARES Act payment if they weren’t required to file a tax return, but that option expired on Oct. 20, 2020.
You may not have received a stimulus check because you didn’t register for it or file a 2019 income tax return in 2020. In that case, you can still claim your payment in 2021 if you file a 2020 tax year return. This payment is available as the Recovery Rebate Credit, which you can claim on your 2020 tax return when you file your federal income taxes in 2021.
Under normal circumstances, tax payments are due on or about April 15. You normally must pay by that date if you haven’t had sufficient tax withheld from your paychecks or if you haven’t sent in enough in the way of quarterly estimated tax payments over the course of the tax year. The IRS will typically begin charging you interest and penalties after that date.
The late-payment penalty is normally 0.5% of any portion of the tax due but not paid by April 15, then 0.5% a month on any unpaid balance, up to 25% total. Interest accrues as well. This rate can change quarterly, because it’s the federal short-term rate plus 3%.
None of these rules applied in 2020, however, at least until after July 15. No fees or interest were assessed prior to that date. In 2021, these fees and interest charges did not apply until after the new May 17 tax deadline.
The extension originally applied only to tax payments due on April 15, but the IRS later said that all payments that would have been due between April 1 and July 15, such as estimated tax payments, were due on July 15 as well. The 2021 extension does not extend the April deadline for estimated payments. They’re still due by April 15, 2021.
Filing an Extension on the Extension
The July 15 deadline applied to individuals, pass-through businesses such as S corporations, sole proprietorships, partnerships, and C corporations. Self-employed taxpayers who normally would have made April 15 or June 15 quarterly estimated tax payments in 2020 also had the additional time to pay. Anyone who needed to file an extension beyond July 15 was required to file IRS Form 4868, or Form 7004 for businesses, by July 15. That would automatically give them until Oct. 15 to file a return.
Under normal circumstances, anyone requesting an extension would still need to make a payment by the normal filing deadline if they anticipated owing taxes, to avoid fees and interest. July 15 was the adjusted deadline, so you had until July 15 to file for the extension and to make payments of any estimated tax due for 2019. The same applied in 2021 with the adjusted May 17 date.
Additional Tax Relief Measures
The IRS also announced the People First Initiative to help taxpayers who were still dealing with other issues with the agency, particularly collection of past taxes owed.
Installment Agreement Payments
In 2020, you could suspend any payments that were due between April 1 and July 15 on an installment agreement you had with the IRS. Interest continued to accrue on the balance you owed, but no penalties were imposed. This provision does not apply to the 2021 extension.
Offers in Compromise
In 2020, you could suspend your payments until July 15 if you entered into an offer in compromise (OIC) with the IRS. Taxpayers who applied for an OIC additionally had until July 15 to submit any documents or information that might have been requested by the IRS in the process of approving the request. The agency wouldn’t cancel your application before then. Neither would you have been in default of an OIC if you hadn’t filed a delinquent 2018 return, because that deadline was also bumped back to July 15.
These provisions do not apply to the 2021 extension.
Field Collection Activities
Field collection activities, such as tax levies and liens, were suspended until July 15 as well, at least for those who weren't considered “high-income non-filers.” Automated liens and levies were also put on hiatus during that time period.
The Earned Income Tax Credit
In 2020, you had until July 15 to verify your income or other factors if you received a notice from the IRS questioning a claim you made for the Earned Income Tax Credit. In most cases, the IRS didn’t initiate new audits through July 15. However, it was still possible to hear from the IRS before that if you made a mistake on your return.
Watch the IRS coronavirus webpage to check for additional relief measures or changes in tax due dates.
The IRS continues to be backlogged due to the pandemic, even into 2021. Existing audits continue moving along but without any in-person meetings.