Should you file a 2020 tax extension?March 10, 2021 - 3 minutes read
We’ve had a lot of changes and challenges this year! There have been more changes to income tax rules, payroll related tax credits and loads of guidelines for SBA funding (EIDL and PPP) and forgiveness than we have ever seen. In fact, there are proposed changes that congress will likely pass sometime this week that will change 2020 taxable income. That means that tax return filings already in the can for 2020, may need to be amended.
The usual tax filing deadlines for S Corporations and Partnerships with a calendar year end is March 15th. The returns can be extended for six months to September 15, 2021. The filing deadline for C Corporations and Individuals remains at April 15th.
Congress and numerous professional organizations have lobbied the IRS to move the individual initial filing deadline to June 15, 2021 this year. The IRS Commissioner has responded each time by stating that the service will not move the initial date beyond April 15th.
Meanwhile, the State of Arizona has not accepted the Federally adopted changes from the CARES Act and the recently passed CCA (think PPP loan & expense tax deductions, EIDL Loans and advances, Employee Retention Credit and unemployment etc.). In a “normal” year, the State readily adopts the changes retroactively but, this year might be different. All the federal changes could potentially mean a lot less revenue for Arizona. And states are reeling from Pandemic economic impact.
By way of example, the federal law allows for non-taxability and deductibility for forgiven PPP loans. California has not fully adopted the federal rules and decided to limit the PPP eligible expenses to $150,000. So much is up in the air, and it remains to be seen where Arizona land.
Given the pending legislation and the State of Arizona’s failure to adopt the federal changes, this may be the year to consider extending your business and/or individual tax filings, at least until the dust settles. If you’re considering an extension, please contact our office ASAP if you’d like to kick it around or if you’d like help with the filing.Contact Us
P.S. Remember, calendar year S Corporations and Partnerships are due Monday, March 15, 2021.
Tax filing extensions do not extend the time to pay your taxes, it’s just an extension to file your return!