written on behalf of Feigenbaum Law
With tax season fast-approaching in both Canada and the United States, people may be feeling more stress than they normally do this time of year. Both countries have provided people with various types of financial support since the start of the COVID-19 pandemic, and some of these measures may have an impact at tax time. For those living in the United States, the IRS has issued an extended deadline for individuals to file their taxes. This week we wanted to take a moment to explain what this extension means for both tax filing and payment.
Tax deadline extended
On March 17, 2021, the IRS announced that the filing date for individuals for the 2020 tax year has been automatically extended from April 15 to May 17, 2021. While the IRS said the extension has been automatically applied (meaning people don’t need to apply to receive an extension), there will be formal guidance provided shortly.
IRS Commissioner, Chuck Rettig, explained the need for the changes, stating, “This continues to be a tough time for many people, and the IRS wants to continue to do everything possible to help taxpayers navigate the unusual circumstances related to the pandemic, while also working on important tax administration responsibilities.”
How does the extension impact payments?
In addition to a deadline in filing taxes, people can also postpone federal income payments that would normally be due on April 15, 2021, to May 17, 2021, without penalties and interest. This applies to individuals who receive employment income as well as those who are self-employed.
However, the IRS has also indicated that the relief does not apply to estimated tax payments that are due on April 15, 2021. Instead, these payments are still due on April 15.
What about state taxes?
The IRS has stated that the federal tax filing deadline postponement only applies to individual federal income returns and tax, and not to state tax payments or deposit payments, or any other types of federal tax. It’s important to remember that state filing and payment deadlines vary from state to state, and people should check with their state tax agencies for those details.
What about Canada?
In Canada, tax returns only have to be filed at the federal level. While there was an extension available to individuals last year, there has been no announcement about such an extension this year. As a result, individual tax payments are still due on April 30, 2021. If at any point there is an announcement that an extension will be made available to Canadians, we will be sure to report it here.
Contact the experienced tax lawyers at Feigenbaum Law for a custom solution to your personal tax planning needs. Our unparalleled knowledge of US and Canadian tax makes us leaders in this field. Contact us about making your transition across the border as smooth as possible. We offer services to clients in the US, Canada and around the world. Contact us to learn more about how we can help or call us at (416) 777-8433 or toll free at (877) 275-4792.