Tax Day has been pushed back in full, with the deadlines for both filing your return for 2020 and paying any taxes you owe for 2020 extended to May 17 due to the coronavirus pandemic dragging on.
This means several deadlines associated with Tax Day also are bumped back to May 17 — with a few exceptions — the IRS clarified this week. The postponed deadlines are for tax-advantaged accounts such as retirement accounts.
Some retirement deadlines extended
The following two deadlines for the 2020 tax year are now May 17:
- Deadline for contributing to an individual retirement account (IRA): This applies to both traditional and Roth IRAs. The base contribution limit for these accounts for the 2020 tax year is $ 6,000, with savers who are 50 or older able to make an additional contribution of $ 1,000.
- Deadline for paying the 10% penalty on early withdrawals from IRAs or workplace retirement plans: To learn about this penalty, check out “3 Tax Penalties That Can Ding Your Retirement Accounts.”
1 retirement deadline unclear
This week’s IRS announcement does not address the deadline for withdrawing excess IRA contributions for tax year 2020, and any money earned on the excess contributions, to avoid owing a 6% annual penalty. And an IRS spokesperson could not clarify this.
So, if you happen to have stashed too much in your IRA for 2020 (here are the contribution limits), consider playing it safe and withdrawing the excess by April 15 if at all possible.
Other deadlines extended
The following deadlines for the 2020 tax year also have been postponed to May 17:
- Deadline for contributing to health savings accounts (HSAs), which are a type of tax-advantaged account for people with high-deductible health insurance: The base contribution limit for these accounts for the 2020 tax year is $ 3,550 for people with self-only coverage and $ 7,100 for those with family coverage. People who are 55 or older can make an additional contribution of $ 1,000.
- Deadline for contributing to Archer medical savings accounts (Archer MSAs), which are another type of account that offers tax benefits to help offset health care costs. You can learn more about such accounts in IRS Publication 969: Health Savings Accounts and Other Tax-Favored Health Plans.
- Deadline for contributing to Coverdell education savings accounts (Coverdell ESAs), which you can learn more about in IRS Topic No. 310: Coverdell Education Savings Accounts.
Deadlines that remain the same
The IRS was clear this week and previously that the deadline for individuals to pay their estimated tax payments for the first quarter of 2021 remains the same: April 15, 2021. This deadline applies to the self-employed and others who earn income from which taxes are not withheld.
Kaplan’s Current Federal Tax Developments reports that the deadline for trust and estate income tax returns for the calendar year also remains April 15. If you happen to have a “C” corporation, the same goes for its tax return for the calendar year.
Should you take advantage of extended tax deadlines?
There’s good reason not to wait until May to file your tax return, especially if you expect a refund: The sooner you file, the sooner you stand to receive your refund.
Similarly, there’s good reason not to wait until May to contribute to a retirement account or most other types of savings accounts: The sooner you deposit money in such an account, the more time it will have to grow.
Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.
