IRS announces filing extension for 2020 tax return

U.S. taxpayers will have an extra month to file their 2020 income tax return and to pay any related tax liability.

The Treasury Department and Internal Revenue Service (IRS) announced Wednesday that the U.S. federal income tax filing deadline for individuals for the 2020 tax year will be extended to May 17, 2021 from April 15.

“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,” said IRS Commissioner Chuck Rettig in a release.

The IRS is also allowing individual U.S. taxpayers to postpone federal income tax payments for the 2020 tax year due on April 15 to May 17 without penalties and interest. Penalties, interest and additions to tax would begin to accrue on any remaining unpaid balances as of May 17, but individual taxpayers would automatically avoid interest and penalties on the taxes paid by that date.

Taxpayers automatically qualify for the filing extension without having to apply. Those who needed additional time beyond May 17 to file could request an extension until Oct. 15 by filing Form 4868. Even with an extension, the payment deadline would remain May 17, however.

The U.S. government said that the tax relief would not apply to estimated tax payments due on April 15. In general, estimated tax payments are made quarterly to the IRS by people whose income isn’t subject to income tax withholding.

Canadians who are also U.S. citizens, U.S. green card holders, or otherwise U.S. persons for tax purposes must file a U.S. income tax return annually in addition to their Canadian tax return.

Separate from the tax filing extension announced on March 17, U.S. taxpayers living outside the U.S. receive an automatic two-month tax filing extension to June 15 and can apply for an extension to Oct. 15. However, any tax liability in respect of a 2020 U.S. tax return would remain due May 17. A tax treaty between Canada and the U.S. usually prevents double taxation.

The Canada Revenue Agency (CRA) has not extended the April 30, 2021 tax filing deadline for the 2020 tax year.

In February, the CRA announced that taxpayers who received Covid-19 income benefits would not be required to pay interest on any outstanding income tax debt for the 2020 tax year until April 30, 2022. To qualify, taxpayers must have had $75,000 or less of total taxable income in 2020 and have received some form of Covid-19 income support last year (such as the Canada Emergency Response Benefit).

However, late filing penalties would continue to apply to 2020 returns filed after April 30, 2021.

Rudy Mezzetta

Rudy is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on tax, estate planning, industry news and more since 2005. Reach him at rudy@newcom.ca.