Federal taxes are due a month later this year due to the COVID-19 pandemic, but not everyone who owes Uncle Sam gets until May 17.
April 15 is still a red-letter day for those who pay their taxes quarterly, such as the self-employed, gig workers, the retired, investors, businesses, and corporations.
Send in money late to the Internal Revenue Service and you’re looking at potential penalties on top of the taxes you’ll owe.
Why are these types of people different? According to the IRS website, income taxes in this country exist on a pay-as-you-go basis, and unlike folks who have taxes withheld (think paychecks, pension payments, and government money such as Social Security benefits), this group has earnings that don’t have taxes withheld. In addition to income from self-employment, such earnings include dividends, capital gains, and rent payments. As a result, people with these types of income have to make quarterly estimated tax payments.
“Estimated” is the key word there. The IRS this week posted an update reminding people who usually pay estimated income tax each quarter that they still have to do so by April 15 for money earned during the first quarter of this year.
There are some exceptions, though. The IRS cites farmers, fishermen, casualty and disaster victims, people who recently became disabled, recent retirees, and individuals whose income isn’t distributed evenly throughout the year.
But if you are a May 17-eligible person anticipating not being ready with your 2020 federal tax return even at that late date, don’t worry. You can file an extension, which will give you until the usual extension date of October 15.
In 2020, the pandemic prompted the federal government to delay the filing deadline for 2019 taxes until July 15.