While having an extra month is great, it is important to pay attention to the details in order to avoid potential penalties or errors. Below we list some reminders as you or your accountant prepares your 2020 taxes:
Federal Deadline: Payments are not due until May 17 and no
penalty will be imposed for April 15 Federal tax payments received by
then. As always, taxpayers may still file
for an extension as late as October 15, 2021, but payments not made by May 17
will be subject to interest and/or penalties.
Tax Estimates for 2021 are still
due April 15: There has been no
adjustment for due dates of 2021 estimated taxes. This is not an issue for taxpayers who have
taxes withheld from their paychecks.
However, those who are self-employed or have sources of income with no
tax withholding, must still make their first quarterly estimated payment by
RMDs that were refunded: For
those who took their 2020 required minimum distributions but then reversed them
after the requirement was waived, pay attention to the 1099-R tax statement
received. Custodians are still required
to report the distribution, but the reversal is not listed on the form. Inform your accountant or mark the
distributed as rolled over when completing your taxes.
Contributions to IRAs or HSAs: The deadline for making a 2020 contribution
to an IRA or HSA has also been extended to May 17.
Taxation of unemployment income: Up to $10,200 of 2020 unemployment benefits
are exempt from federal tax for those with adjusted gross income up to
$150,000. Whether it is subject to state
income tax depends upon the state.
Winter Storm Relief: Victims of the winter storms in
Louisiana, Oklahoma and Texas have until June 15 to file their taxes and make
State tax deadlines vary by state: Each state has its own tax deadline. While many have extended their deadline to May 17 or later (including New Jersey, Massachusetts, New York, Connecticut, the District of Columbia and Virginia), others are sticking to their normal schedule (Hawaii and New Hampshire). Furthermore, some states have extended the filing deadline and waived penalties but will still charge interest on payments received after April 15 (North Carolina and Alabama). Maryland is one state that has moved both its 2020 filing deadline as well as first and second 2021 estimated tax payment due dates to July 15. Finally, there are some states that are considering but have not yet passed any bills, as of the time of this writing (Idaho and Arizona). Please check your state’s regulations.