Anyone can request an automatic tax-filing extension, but some people get extra time without asking, according to the IRS.
Due to the ongoing pandemic, this year the IRS postponed the usual April 15 deadline for filing individual income tax returns until May 17, 2021. Even so, as is the case every year, many Americans will still need more time to meet their tax-filing obligation.
The IRS estimates that more than 16 million taxpayers will get an automatic extension this filing season, either by filing a form or making an electronic tax payment. But some taxpayers, including disaster victims, those serving in a combat zone and Americans living abroad get more time, even if they don’t ask for it. Here are details on each of these special tax-relief provisions.
Victims of the February winter storms in Texas, Oklahoma and Louisiana have until June 15, 2021, to file their 2020 returns and pay any tax due.
The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in a federally declared disaster area when at least one area qualifies for FEMA’s Individual Assistance program. Ordinarily, this means that taxpayers need not contact the IRS to get disaster tax relief.
This relief also includes more time for making 2020 contributions to IRAs and other plans and making 2021 estimated tax payments. In some cases, relief is also available to people living outside the disaster area if, for example, they have a business located in the disaster area, have tax records located in the disaster area or are assisting in disaster relief. For details on all available relief, visit the Around the Nation page on IRS.gov.
Combat zone taxpayers
Military service members and eligible support personnel serving in a combat zone have at least 180 days after they leave the combat zone to file their tax returns and pay any tax due. This includes those serving in Iraq, Afghanistan and other combat zones. A complete list of designated combat zone localities can be found in Publication 3, Armed Forces’ Tax Guide, available on IRS.gov.
Combat zone extensions also give affected taxpayers more time for a variety of other tax-related actions, including contributing to an IRA. Various circumstances affect the exact length of the extension available to taxpayers. Details, including examples illustrating how these extensions are calculated, are in the Extensions of Deadlines section in Publication 3.
Taxpayers outside the United States
U.S. citizens and resident aliens who live and work outside the U.S. and Puerto Rico have until June 15, 2021 to file their 2020 tax returns and pay any tax due.
The special June 15 deadline also applies to members of the military on duty outside the U.S. and Puerto Rico who do not qualify for the longer combat zone extension. Affected taxpayers should attach a statement to their return explaining which of these situations apply.
Though taxpayers abroad get more time to pay, interest — currently at the rate of 3% per year, compounded daily — applies to any payment received after this year’s May 17 deadline. For more information about the special tax rules for U.S. taxpayers abroad, see Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, on IRS.gov.
Taxpayers who don’t qualify for any of these three special situations can still get more time to file by submitting a request for an automatic extension. This will extend their filing deadline until October 15, 2021. But because this is only a tax-filing extension, their 2020 tax payments are still due by May 17.
An easy way to get the extra time is through Free File on IRS.gov. In a matter of minutes, anyone, regardless of income, can use this free service to electronically request an extension on Form 4868. To get the extension, taxpayers must estimate their tax liability on this form.
Another option is to pay electronically and get a tax-filing extension. The IRS will automatically process an extension when a taxpayer selects Form 4868 and makes a full or partial federal tax payment by the May 17 due date using Direct Pay, the Electronic Federal Tax Payment System (EFTPS) or a debit or credit card. Under this option, there is no need to file a separate Form 4868. Please note, you must register for EFTPS before using. Electronic payment options are available at IRS.gov/payments.
Posted by Jessica Ji, Associate Editor, Wealth Strategies Journal.