IRS tax deadline changing with income taxes and payments due May 17

The Internal Revenue Service is pushing back the tax filing deadline by a month and income taxes and payments will now be due May 17 instead of April 15, the agency and Treasury Department announced Wednesday.

The news was first reported by Bloomberg who said the deadline was expected to be in mid-May. The IRS said it will provide “formal guidance in the coming days.”

The delay comes as the IRS is dealing with a massive backlog that has left it unable to fully process roughly 24 million tax filings from individuals and businesses since the 2019 tax year.

Taxpayers who file an extension would still have an Oct. 15 deadline. The IRS said the deadline change only applies to federal taxes and payments. State deadlines can vary and are not always the same as the federal filing deadline.

The American Institute of CPAs (certified public accountants) was calling for extending the filing and payment deadline for the 2020 tax year until June 15. The IRS previously extended the deadline to June 15 for Texas, Oklahoma and Louisiana because of the winter storm.

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“This continues to be a tough time for many people, and the IRS wants to continue to do everything possible to help taxpayers navigate the unusual circumstances related to the pandemic, while also working on important tax administration responsibilities,” IRS Commissioner Chuck Rettig said in a statement. “Even with the new deadline, we urge taxpayers to consider filing as soon as possible, especially those who are owed refunds.”

Rettig said filing electronically with direct deposit is the quickest way to get refunds. Taxpayers who didn’t receive the first or second stimulus payments may be eligible to claim the Recovery Rebate Credit.

Democrats on the House Ways and Means Committee previously requested that Rettig extend the tax return filing season beyond April 15. Rettig is scheduled to give testimony about the filing season Thursday to the Oversight Subcommittee, according to a joint statement from House Ways and Means Committee Chairman Richard Neal, D-Mass., and Oversight Subcommittee Chairman Bill Pascrell, Jr., D-N.J..

“This extension is absolutely necessary to give Americans some needed flexibility in a time of unprecedented crisis,” Neal and Pascrell said in the statement. “Under titanic stress and strain, American taxpayers and tax preparers must have more time to file tax returns.”

Nearly 7 million tax filers who await their tax refunds face significant delays this tax season as the IRS rushes to send out stimulus checks to millions of struggling Americans who have faced economic hardship in the coronavirus pandemic. The agency is grappling with staffing and outdated IT systems at a time when it’s also implementing sweeping tax code changes from the COVID-19 relief packages.

Tax season was delayed from the start as the IRS began to accept and process tax returns on Feb. 12, which was a two-week delay from previous years.

The latest $1.9 trillion stimulus package creates a new tax break for tens of millions of workers who received unemployment benefits last year after businesses were forced to close and lay them off during the coronavirus pandemic.

As part of the American Rescue Plan, many taxpayers wouldn’t be required to pay taxes on up to $10,200 in unemployment benefits received last year. The exclusion is up to $10,200 of jobless benefits for each spouse for married couples.

IRS officials said Monday that more guidance will be available soon, for example, about what taxpayers need to do if they’ve already filed a federal income tax return but had jobless benefits in 2020. The IRS said taxpayers should not file amended returns just yet.

The extension comes after an intense year for the chronically underfunded IRS. The pandemic hit in the middle of last year’s tax filing season, setting the agency back in terms of processing. The IRS has also been a key player in doling out government relief payments, and is helping to send out the third round of payments in the middle of the current tax filing season.

Additionally, the extension gives the IRS time to issue guidance on recent tax law changes. The American Rescue Plan excludes the first $10,200 of unemployment benefits from federal taxes for those making less than $150,000.

“Never before has the law changed so substantially in the middle of tax filing season,” Patrick Thomas, director of Notre Dame Law School’s Tax Clinic, said in a statement. “This also gives the IRS time to issue needed guidance on unemployment compensation, as millions of returns already filed likely do not account for this change.”

Senate Finance Committee Chair Ron Wyden, D-Oregon, also said he supported the change.

“This filing season has been particularly challenging for low-income taxpayers and small tax preparers as they navigate the pandemic, and I support extending the filing deadline for individuals to May 17,” Wyden said in a statement. “With Democrats enacting tax forgiveness for jobless benefits, which tens of millions of Americans received in 2020, one additional month to file is especially important for workers and their families.”

Contributing: Jessica Menton and Nicholas Wu, USA TODAY; Susan Tompor, Detroit Free Press; Associated Press

Follow USA TODAY reporter Kelly Tyko on Twitter: @KellyTyko

This article originally appeared on USA TODAY: IRS tax deadline extension: Federal taxes need to be filed by May 17

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