In this article, we’re going to cover when you can file taxes in 2021 – for income earned in 2020. Because income taxes are always filed after the end of the actual tax year, it can sometimes be confusing when 2020 and 2021 are used interchangeably to describe the same event. We’ll need to be aware that when we talk about 2021, we’re really talking about 2020 income tax.
Filing income taxes isn’t all about the commonly understood April 15 deadline. Depending on your tax status, there are a large number of other deadlines you’ll need to be aware of, especially if you’re self-employed or have significant income from non-W-2 sources.
The information we’re providing in this article is summarized from IRS Publication 509, Tax Calendars For use in 2021. However, be aware that the publication is currently only a draft and may be subject to minor modification as we move into 2021.
The 2021 Filing Dates for Your 2020 Income Tax
The actual filing date for federal income tax returns is April 15 – or thereabouts. The “thereabouts” caveat is because the due date is sometimes extended by a day or two if the 15th falls on a either Sunday or a holiday.
For 2021, April 15 falls on a Thursday, so the due date for 2020 income tax returns will actually be on the 15th.
If for whatever reason you can’t file your return by April 15, you can request an automatic extension to file by October 15, 2021.
But understand that this is an extension to file your income tax return only. If you owe tax liability it must be paid by April 15. If you file for the extension and owe tax, penalties and interest will be added to the unpaid balance.
How Soon Can You File Your 2020 Income Tax in 2021?
While you can prepare your income tax return any time after the end of the 2020 calendar year – providing you have all necessary documents and information – you may not be able to file the return immediately. That will be true even if you prepare your return online and plan to e-file.
Sometime in late December the IRS will announce the date upon which they will begin accepting e-filed returns. This is usually sometime between January 15 and February 1.
You can certainly prepare your return and have it ready to be filed in advance of the date announced by the IRS. But you won’t be able to file until the date the IRS announces it will begin accepting returns.
If you are ready to start preparing your return here’s where you can file for free.
When You Can Expect to Receive W-2s and 1099s
Your efforts to file your return as soon as possible may be determined by when you receive important tax documents, like your W-2s, or 1099s for additional income from freelancing, a side business, taxable investment income (including capital gains), or the sale of investment property.
Employers have until January 31, 2021, to provide your W-2. If they wait until the last day, you may not receive your W-2 until early February.
1099s for non-employee compensation are due to be issued by January 31, 2021. However, 1099s for other types of income – such as interest, dividends, capital gains and property sales – are not required to be issued until February 28, 2021.
Why You Should File Your Tax Return as Early as Possible
While some taxpayers don’t even begin thinking about income tax filing until March – and for a few, not until April – that won’t be the best strategy for most taxpayers.
There are two primary reasons to file your tax return as early in the year as possible:
To get your refund as soon as possible. According to the IRS, the average income tax refund in 2020 was $2,476, and that doesn’t include any state income tax refund you may be entitled to. According to the IRS, refunds were issued to 123.4 million taxpayers, which is the vast majority of taxpayers in the country.
To minimize the possibility of income tax refund fraud. Scammers have found ways to file a fraudulent tax return using your personal information, which can include your name, Social Security number, and address. They’ll file a return very early in the year, claiming a large refund. By filing early, you’ll reduce the possibility of this happening. Here’s more about that.
On the first point, it’s also worth noting that the earlier you file during the tax season, the faster the return will be processed. For example, if you file in February, you’ll likely receive your refund within two weeks. But if you wait until early April, it may be delayed as long as three or four weeks. That’s because processing times get longer as more returns are filed. By filing early, the stream of incoming returns at the IRS will be lighter.
Other Income Tax Deadlines to be Aware Of
Though the individual income tax filing deadline (April 15) and the extension filing date (October 15) are of importance to most taxpayers, there are other tax deadlines that will apply in 2021, just as in all other tax years. But those will apply primarily to the self-employed, small businesses, and anyone who expects owe additional tax.
Examples of individuals who may owe additional tax include the following:
- Full-time employees who also have a side business.
- Individuals who receive significant investment income.
- Social Security, pension and retirement distribution recipients (though withholding can usually be established with each income type).
- Recipients of a large amount of unemployment insurance. This will be especially important for the 2020 tax year since millions of Americans received both federal and state unemployment benefits at some time during the year.
- Anyone who receives a taxable windfall, such as from the sale of an investment property, undeveloped land, or a business asset.
Each of the above activities or events can result in an additional income tax liability, which will require the payment of tax estimates over and above any withholding you may have on your regular earnings from employment.
Tax Estimates for the Self-Employed and Others with Additional Tax Liability
The IRS expects taxpayers to pay additional tax liability in the quarter in which it’s earned. Many self-employed individuals who have their returns either professionally prepared or self-prepared using tax-preparation software, will have those estimates prepared in advance based on the previous year’s tax liability.
The due dates for the remainder of the 2020 tax year, and for the upcoming 2021 tax year are as follows:
- January 15, 2021 – the fourth and final tax estimate due for 2020.
- April 15, 2021 – the first tax estimate due for 2021.
- June 15, 2021 – the second tax estimate due for 2021.
- September 15, 2021 – the third tax estimate due for 2021.
- January 15, 2022 – the fourth and final tax estimate due for 2021.
If you have a small business and file your business income and expenses on Schedule C of your individual 1040, your business and individual filing deadline will be the same – April 15, 2021.
But if you operate your business as either a partnership or an S corporation, you’ll be required to file a tax return for your business by March 15, 2021.
That will include an IRS Form 1065, U.S. Return of Partnership Income for partnerships, or IRS Form 1120-S, U.S. Income Tax Return for an S Corporation for a Subchapter S corporation.
If you can’t file either returned by the deadline, you’ll have a six-month extension to file, which will move the due date out to September 15, 2021.
Since the income from both partnerships and S corporations flows directly through to your individual income tax return, neither business tax return will typically require payment of tax.
However, the reason why business tax returns are due to be filed at least 30 days before individual income tax returns is to give the individual taxpayer the final income numbers to report on his or her individual return. For that reason, filing an extension on a business tax return may also require getting an extension on your individual return – unless the business tax return will be filed before April 15.
When it comes to income tax filing, it’s never too early to know the relevant filing dates. That will not only give you an opportunity to prepare in advance – and to get your refund as soon as possible – but also to avoid any penalties or interest that may be added if you miss a filing or payment date.
As 2021 unfolds, mark any of these due dates or deadlines on your calendar that will apply to you so you won’t be caught by surprise.