Let’s start with the good news: The Treasury Department and Internal Revenue Service announced that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. The IRS will be providing formal guidance in the coming days. Individual taxpayers can postpone federal income tax payments for the 2020 tax year due on April 15, 2021 to May 17, 2021, without penalties and interest, regardless of the amount owed. This postponement applies to individual taxpayers, including individuals who pay self-employment tax. Penalties, interest and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. Individual taxpayers will automatically avoid interest and penalties on the taxes paid by then as well. Individual taxpayers do not need to file any forms or call the IRS to qualify for this automatic federal tax filing and payment relief. Individual taxpayers who need additional time to file beyond the May 17 deadline can request a filing extension until Oct. 15 by filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. Filing Form 4868 gives taxpayers until Oct. 15 to file their 2020 tax return but does not grant an extension of time to pay taxes due. Filing an extension only gives you time to file, not pay. Taxpayers should pay their federal income tax due by May 17, 2021, to avoid interest and penalties. The IRS urges taxpayers who are due a refund to file as soon as possible. Most tax refunds associated with e-filed returns are issued within 21 days. The bad news This relief does not apply to estimated tax payments that are due on April 15, 2021. These payments are still due on April 15. Taxes must be paid as taxpayers earn or receive income during the year, either through withholding or estimated tax payments. In general, estimated tax payments are made quarterly to the IRS by people whose income isn’t subject to income tax withholding, including self-employment income, interest, dividends, alimony or rental income. Most taxpayers automatically have their taxes withheld from their paychecks and submitted to the IRS by their employer. Other filing due dates
Form 941, Employer’s Quarterly Federal Tax Return: Due April 30, 2021.
Quarter 1, March NV Sales Use Tax Report: Due April 30, 2021.
Quarter 1, NV Modified Business Tax: Due April 30, 2021.
Other tax topics
Remember to take advantage of the newly extended employee retention credit, designed to make it easier for businesses that — despite challenges posed by COVID-19 — chose to keep their employees on the payroll. The Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted December 27, 2020, made a number of changes to the employee retention tax credits previously made available under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), including modifying and extending the Employee Retention Credit (ERC), for six months through June 30, 2021. Several of the changes apply only to 2021, while others apply to both 2020 and 2021. As a result of the new legislation, eligible employers can now claim a refundable tax credit against the employer share of Social Security tax equal to 70% of the qualified wages they pay to employees after December 31, 2020, through June 30, 2021. Qualified wages are limited to $10,000 per employee per calendar quarter in 2021. Thus, the maximum ERC amount available is $7,000 per employee per calendar quarter, for a total of $14,000 in 2021. Employers can access the ERC for the 1st and 2nd quarters of 2021 prior to filing their employment tax returns by reducing employment tax deposits. Small employers (i.e., employers with an average of 500 or fewer full-time employees in 2019) may request advance payment of the credit (subject to certain limits) on Form 7200, Advance of Employer Credits Due to COVID-19, after reducing deposits. In 2021, advances are not available for employers larger than this. The Paycheck Protection Program ends on March 31, 2021. All eligible entities can apply through a participating lender until then. This is a general discussion. Discuss your specific situation with a qualified CPA. Michael D. Bosma, CPA, is Principal-in-Charge of Keystone CPAs. His monthly NNBW column, “Covering Your Assets,” focuses on effective planning strategies for every business owner. Reach him for comment at mbosma@keystone.cpa.
