2020 Federal Income Tax Extension

On March 17, 2021, the IRS announced that the due date for individuals to file their 2020 federal income tax returns (e.g., Form 1040, 1040-EZ) will be automatically extended from April 15, 2021 to May 17, 2021. Individual taxpayers do not need to do anything to qualify for the extension. The extension includes both filing and non-estimated payment obligations, which means that interest and delinquency penalties will not accrue for payments made on or before May 17, 2021.

Any taxpayers needing additional time to prepare and file their 2020 tax returns can submit a Form 4868 extension of time to file, which will extend the filing deadline to October 15, 2021. However, the Form 4868 will not extend the payment deadline, so all income taxes must be paid by May 17th to avoid interest and penalties.

While the extension includes individuals who report self-employment income through Schedule C or flow-through income on Schedule E, it does not presently include partnerships, limited liability companies, or S corporations filing Forms 1065 or 1120S which were due March 15, 2021. The extension also does not presently cover C corporations filing Form 1120 which are due by April 15, 2021.

Finally, the extension does not apply to first quarter 2021 estimated tax payments which are due April 15, 2021. In general, estimated tax payments must be paid for independent contractors, self-employed individuals, and other individuals who do not have taxes withheld from their income. The amount of estimated taxes is generally based on the lesser of: (i) 90% of the tax estimated for 2021, or (ii) 100% of the tax shown on the 2020 tax return. Estimated tax payments are made by filing Form 1040-ES with payment each quarter. In the event a taxpayer does not make sufficient quarterly estimated tax payments, the IRS may assess estimated tax penalties.

2020 Illinois Income Tax Extension

On March 18, 2021, Governor Pritzker announced that the 2020 Illinois tax filing and payment deadline would be extended from April 15 to May 17, 2021, giving all Illinois taxpayers an extra month to file and pay their 2020 income tax liabilities. Taxpayers expecting liabilities may benefit by this extension by deferring payment. Taxpayers expecting refunds can still file at any time to receive their refund ahead of the deadline.

However, first quarter 2021 estimated tax payments are still due on April 15, 2021. The amount is the estimated payment should either be: (i) 100% of the estimated liability for 2021, (ii) 90% of the actual liability for 2021, or (iii) 100% of actual liabilities for 2019 or 2020.

Similar to the federal extension, the Illinois extension only applies to individuals, and does not cover businesses.

Sandra Mertens
[email protected]