IRS Extends 2021 Tax Filing Deadline for Texas Taxpayers

The IRS has recently announced that Texas taxpayers and victims of the Texas winter storms will now have until June 15, 2021, to file their individual and business tax payments and receive tax returns.

The IRS will waive the usual fees and requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation "Texas - Severe Winter Storms," in bold letters at the top of Form 4506 and submit it to the IRS.

Why did the IRS extend the tax deadline?

Frigid temperatures and winter weather have severely impacted residents of Texas and surrounding regions. Power grid failureshave left millions without electricity and heat, water treatment plant failures have resulted in contaminated water, and burst pipes have left many pipes running dry.

Even as power is restored, many Texas residents are struggling with frequent outages. The state’s power plants were not ready for the freezing temperatures of the winter storm. As people turned up the heat, demand for natural gas increased exponentially. The Electric Reliability Council of Texas, which oversees the majority of the state’s power grid, reported that demand peaked at 69,000 megawatts on Sunday. This surpassed its planned worst case scenario by magnitudes.

The IRS has decided to extend that April 15 tax deadline to June 15 so Texas taxpayers can address the current crisis. Taxpayers in other states affected by the winter storms will automatically receive the same filing and payment relief.

Which Texas taxpayers qualify for this extension?

Any individual or entity within the covered disaster area is qualified, including:

-        Individuals who live in the area

-        Businesses and tax-exempt organizations whose principal place of business is located in the area

Taxpayers who are not within the recognized disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) within the covered disaster area, are entitled to this extension.

Workers who have or are currently assisting the relief activities in the covered disaster area are entitled to relief if they are affiliated with a recognized government or philanthropic organization.

Individuals who were killed or injured as a result of the disaster are entitled to relief as well, even if they were visiting and are not residents of the area.

Individual taxpayers may want to utilize professional tax services to maximize their deductibles.

What this means for you.

Taxpayers do not need to file any additional forms because the due date extension is automatic. The IRS has noted that if it sends any late payment of filing penalty notices to a taxpayer, then he or she is advised to contact the IRS directly through a number which will be listed on the notice.

Those who are suffering from casualty-related losses to the winter storm which are uninsured or unreimbursed may deduct those losses from the previous year’s tax return. In this case, these losses can be deducted from the 2020 tax return rather than waiting to prepare and file a 2021 tax return in 2022.

Personal casualty losses are still subject to some regulation. A limitation of $100 per loss / 10 percent of adjusted gross income (AGI) may be deducted so that the portion of the loss exceeding such an amount may be deducted. A Form 4684 must be filed. Federal Emergency Management Agency (FEMA) Declaration Number 4856 should be shown on the return showing such loss.

Is the state deadline affected?

The deadline for Texas state taxes remains to be set on April 15 for most taxpayers.

An affected farmer or fisherman will not be subject to penalties for failure to pay estimated tax for the 2020 tax year if he files the 2020 income tax return by June 15, 2021, and pays the full amount shown as due.

The Texas Comptroller of Public Accounts, Glenn Hegar, has announced that the due date for 2021 franchise tax reports will also be extended to June 15. 

"To assist businesses coping with the unprecedented winter storm and resulting power outages and water shortages, we thought it appropriate to align the state's franchise tax deadline with the IRS deadline, just as we did last year when the IRS moved its filing deadline back because of the pandemic," Hegar said. "Texas businesses and business owners should be focused on recovery efforts and the health and well-being of their families, employees and communities, and I am hopeful this action gives them that added flexibility."

Franchise taxpayers who are mandatory electronic funds transfer (EFT) payers may request an extension of time to file on August 15, 2021. They must pay 90 percent of the tax due for the current year, or 100 percent of the tax reported as due for the prior year, with the extension request.

On or before August 15, franchise taxpayers may request a second extension of time to file their report and must pay the remainder of any tax due with their extension request. The August 15 extension request extends the report due date to November 15, 2021. Any payments made after August 15 will be subject to penalty and interest.

To retain peace of mind, businesses may want to utilize professional tax services to ensure these taxes are done accurately while maximizing tax benefits.

What Texas taxpayers need to remember:

While the deadline for federal taxes has been extended to June 15, 2021, the deadline for Texas state taxes remains to be set on April 15. Some businesses may extend the deadline beyond June 15. Tax deductions are available for individuals and businesses which have been affected by the Texas winter storms.

Yoke Tax has knowledgeable tax pros on hand to help with the complicated process of paying taxes, especially during a crisis. We work with you to make sure you are getting the most out of your money. Our services are specialized for individual taxes, business taxes, and bookkeeping.

Unsure about where to start? Book a free one hour consultation with our professionals. We are ready to work with you and help with your business and personal tax needs. If you have questions, we have the answers.