Last year, when the coronavirus outbreak first hit hard, the IRS was quick to respond by postponing the 2020 tax-filing deadline from April 15 to July 15. At a time when so many people were losing their jobs and dealing with so much financial and health-related uncertainty, that reprieve couldn't have come at a better time.
This year, the IRS initially insisted it would hold firm on the standard April 15 tax deadline. But recently, lawmakers passed a $1.9 trillion coronavirus relief package that includes a number of tax changes, including a federal tax exemption on unemployment benefits. To allow tax preparers ample time to deal with these very recent changes, the IRS has agreed to move this year's filing deadline back a month, with a new deadline of May 17. To be clear, that means filers get another month to not only submit their returns, but pay any tax debts associated with them.
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But some people may need to make a tax payment by April 15, despite the added leeway the IRS has given filers. Here's what you need to know.
Estimated tax payments don't get an extension
If you're self-employed and don't have taxes withheld from your earnings on a regular basis, you're required to make estimated quarterly tax payments to the IRS. If you neglect those payments and attempt to settle your tax bill for the year when you file your return, you could end up on the hook for costly penalties.
Normally, quarterly tax payments are due as follows:
- April 15
- June 15
- Sept. 15
- January 15
This means the first quarterly payment due in 2021 is coming up in under a month. But despite the IRS extending the tax-filing deadline, that first payment is still, as of now, due on April 15. And that's something those on the hook for estimated payments need to be aware of.
Now last year, when the IRS pushed the tax-filing deadline back by three months, it also moved the deadline to submit April's quarterly payment to July 15. This year, that doesn't seem to be happening, so those who make estimated quarterly payments should still plan on submitting them by mid-April to avoid penalties.
Keep in mind that it's not just self-employed people who need to make estimated payments to the IRS. If you earn a lot of money outside of a salaried wage -- say, you buy stocks frequently and earn a lot of dividend income or capital gains -- then you may need to pay the IRS as you go, depending on how much money you're bringing in and what your total tax burden looks like.
If you're not sure whether you need to make estimated tax payments, or how to calculate what you owe the IRS, it could help to speak to a tax professional -- and soon. While you may be in line for extra time to file your 2020 tax return, you may still need to write the IRS a check within the next four weeks.
