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On March 17, 2021, the Treasury Department and IRS announced the automatic extension until May 17, 2021, for individuals to file Form 1040 and pay federal income taxes without penalties or interest for the 2020 tax year.

The relief applies to individuals, including those who pay self-employment tax. Individual taxpayers do not need to file any forms or call the IRS to qualify for the extension.

The postponement does not apply to 2021 estimated tax payments due on April 15, 2021, which are still due on that date. The postponement also does not apply to state tax payments or deposits or payments of any other type of federal tax.

Taxpayers included in the IRS's recent disaster relief covering Texas, Oklahoma and Louisiana will still have until June 15, 2021, to file returns and pay tax liabilities. As with all disaster relief declarations, taxpayers are advised to pay careful attention to the scope of the specific relief provided.

The IRS said it will release formal guidance for the May 17, 2021, extension in the coming days.

Implications

The IRS announcement simply extends the due date of the 2020 Form 1040 and related tax payments from April 15 to May 17. The announcement does not extend the due date for:

1. Estimated tax payments due on April 15 for any type of taxpayer
2. Fiduciary income tax returns due on April 15, including those filed on Forms 1041, 1041-A, 5227 or 3520-A
3. Calendar-year corporation returns due on April 15
4. Fiscal-year exempt organization information returns (Form 990 series) due on April 15
5. Gift tax returns (Form 709 series) due on April 15, which will require an extension separate from the Form 1040 extension
6. Estate tax returns (Form 706)

For taxpayers subject to a disaster-related extension — like those in Texas, Oklahoma and Louisiana due to the recent winter storms — the IRS announcement has no real impact because tax filing and payment deadlines in those states are fully extended to June 15 for virtually all purposes.

Disaster-related extensions aside, having estimated payments due on April 15 and Forms 1040 due on May 17 creates some complexity for taxpayers who would traditionally remit their first-quarter estimate as part of their extension tax payment. For people relying primarily on estimates (versus withholdings) to satisfy their income tax liabilities — most of whom are high-net worth or self-employed — the extension may not provide a great deal of relief. This is because calculating the first-quarter 2021 estimate requires determining one's 2020 anticipated total liability, which is nearly as much work as filing a Form 1040 by April 15. The relief provision may, however, provide a welcome deferral for individuals who rely on withholding, i.e., most individual taxpayers.

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