May 17th Tax Extension; What You Need To Know

Your state and federal tax deadlines have now been extended until May 17th! Here is everything you need to know!

As many of you may or may not have heard, the tax deadline has been extended from April 15th to May 17th! However, before we dive into everything you need to know about this new extension, we wanted to remind all of our clients and readers that just because this extension has been offered, that doesn't mean you should wait until the last minute to prepare them! Waiting until the last minute is tough on our company, and we want to make sure that we deliver the best service possible! Please make sure that if you are planning to work with us to prepare your taxes, please bring all of your information to us now.

On March 17th, the IRS announced that they would be pushing back the federal tax filing deadline from April 15th to May 17th. Their reasoning behind this was to continue to help all taxpayers deal with the strange and unusual tax atmosphere that many are navigating after the difficulties faced in 2020. What we've all had to deal with financially and how to navigate it all has been challenging, and many will benefit from this change. This announcement also stated that taxpayers can delay payment of any money owed to the IRS until May 17th as well. This decision was also brought to light after the $1.9 trillion American Rescue Plan was passed, which included a third stimulus check. Having to deal with processing tax returns and refunds while also sending out another round of stimulus checks was going to be a difficult task for the IRS. This deadline offered some relief to both the taxpayers and those collecting taxes. Many politicians agreed that due to continued stress and strain on the American taxpayer from this ongoing unprecedented crisis, that this extension was absolutely necessary. It is also important to know that this new economic bill that was signed into law by the president on March 11th came with several new changes, not just another stimulus payment. For tax filers with an income of $150,000 or less, the first $10,200 individuals received in unemployment and $20,400 for married couples is now tax-free. The child tax credit for children ages 6 to 18 was expanded to $3000, and for children under 6, it was expanded to $3600.

Moving tax day also brought to light that while Americans have been dealing with all the effects of the pandemic for over a year now, this remains one of the most complicated tax seasons in the history of the U.S. Also, on the side of the devastation that the pandemic has left behind, there have been many more requests for extensions due to a rise in children requesting help with deceased parent's estates, according to U.S. News. The IRS is now dealing with more final returns, estate returns, and trust returns this year. Many people also refinanced their mortgages in 2020 to help ease any financial strain, which added to the complexity of filing for many taxpayers. For businesses like gyms and restaurants, they are dealing with significant losses which will be claimed on their tax returns. This will also add the time needed to fill out and make sure these taxes are done properly, making sure they are given what they're owed.

Moving tax day from April 15th to May 17th allows taxpayers to gather and save the money they need to pay the IRS what they owe. This will help many who were caught owing a lot to the IRS due to not taking taxes out of their unemployment taxes. Even with those who have will benefit from some of their unemployment money becoming tax-free, many will still owe a good amount of money. It is giving taxpayers more time to sort things out and to get any unreceived stimulus payments straightened out. Please remember that stimulus checks are not reportable or taxable. If you still need another tax extension, you can apply for one that gives you until October 15th to get everything in. This new tax extension date of May 17th does not affect the October extension.

While many were relieved that the federal tax due date was extended to May 17th, there were still state taxes to worry about. While extensions like these usually are followed very quickly by state taxes following suit, nothing was set in stone until a few days later. South Carolina decided to also extend their tax due date to May 17th, to match the new federal tax extension. Taxpayers do not need to file anything or fill out any paperwork to receive this extension from the South Carolina Department of Revenue (SCDOR), it will just happen automatically. Along with the IRS, the SCDOR recommends that all taxpayers file electronically, making the process simpler for all parties involved and to receive any return payments much faster. It is very important to understand that those paying estimated taxes must still pay by April 15th.

While the state has now changed its tax date to match that of the IRS, tax preparers and the state are still waiting to receive more information and guidance from the IRS. Once that is received, please pay close attention when filing your South Carolina state taxes to make sure you follow these new guidelines correctly. Please also remember that these will be new guidelines for your tax preparers to deal with. With these changes both the IRS and the SCDOR recommend that you file both sets of taxes as soon as you can if you haven't already, with electronic filing as their preferred method. Please note that filing sooner will help you receive your tax returns quicker and any stimulus payments that were not received last will also get to you faster. While this extension can offer the stress relief needed by many, Hoods does align with the IRS and SCDOR to urge our customers to file and prepare their taxes with us now and not to wait until the last moment. This will be greatly appreciated by our whole staff and will help relieve a large amount of stress on our company, If you have any more questions or concerns, please do not hesitate to reach out, and we will guide you through this new extension as best we can! Remember, we don't know what could happen next when it comes to our taxes. Things are still very volatile and up in the air. It is best to get your taxes done and filed just to be safe, and to avoid any future issues that we can't plan for or see. Remember, if you are looking for the best accounting services in Goose Creek, the best tax preparation in Goose Creek, business consulting in Goose Creek, bookkeeping in Goose Creek, or payroll services in Goose Creek, we are here for you! Our phone lines and inboxes are waiting for you. Don't hesitate! Please stay safe, everyone. We will see you soon!

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