US Internal Revenue Service Delays Tax Filing Date to May 17

The IRS announced late Wednesday, March 17, 2021 that it is moving the federal income tax filing deadline for individuals to May 17, rather than April 15.  In its statement, the IRS said that the extended deadline applies to individual taxpayers, including those who pay self-employment tax. Moreover, federal income tax payments for the 2020 tax year do not need to be paid until May 17, 2021, regardless of the amount owed, and no penalties or interest will be incurred if paid by that date.

No forms need to be filed by individual taxpayers in connection with this automatic extension.  Individuals can request an additional extension to file their return until October 15, 2021 by filing IRS Form 4868.

Importantly, the IRS also made clear that the extension does not apply to estimated quarterly payments.  Therefore, the first quarterly installments of 2021 estimated taxes will remain due on April 15 (including those relating to self-employment income).  For practical purposes, individual taxpayers paying estimated taxes would still need to estimate their 2020 tax liability in order to determine safe harbor amounts for 2021 estimated taxes.

This extension only applies to an individual’s federal income tax return and State filing and payment deadlines may be different.

The IRS faced mounting pressure from lawmakers to push back the filing deadline in response to the recent tax law changes resulting from the various coronavirus relief packages, including the most recent $1.9 trillion American Rescue Plan Act stimulus package passed earlier this month.  The American Rescue Plan Act, among other things, provides taxpayers with up to $1400 in additional stimulus payments and includes a new tax exemption on jobless benefits up to $10,200.

Source:  Brian Bunner/Dickinson Wright

About Relocation America International

Relocation America International is a full service relocation management company dedicated to providing innovative relocation services, value added support, and superior customer service to clients relocating families domestically and internationally. Visit http://www.rainternational.com for more information about our services or contact us at info@rainternational.com.

Filing Season Tax Tips for 2018 U.S. Relocating Employees

The moving expense deduction was suspended for 2018 through 2025 in the tax reform act of 2017. Therefore, moving expenses will not be deductible on your 2018 federal tax return.  However, there are some circumstances in which you may still be entitled to the following moving expense breaks

Some states continue to allow deductions and exclusions for moving expenses that were deductible under the federal tax code prior to 2018.

States that allow a deduction:  Arizona, Arkansas, California, Hawaii, Iowa, Massachusetts, Minnesota, New York, Pennsylvania, and Virginia.

• States that allow an exclusion:  The 10 states above, plus New Jersey.
• Carefully check your W-2 if you moved to or from one of those states to be sure deductible moving costs paid or reimbursed by your employer were not included in state income.

If you are deducting moving expenses on a state return, or are a member of the active duty armed forces moving pursuant to a military order, here are several items deductible as moving expenses that are sometimes overlooked:

• Tips to the moving van driver or helpers.
• Mileage for driving second or third cars to the new location (in addition to the first car). The deduction for 2018 is 18 cents per mile.
• Lodging expenses in the departure location for one night after the household goods are packed, and one night in the new location on the day of arrival.
• Moving household goods from a location other than your main home, up to what it would have cost to move them from the main home
• Storage of household goods for up to 30 days, including the cost of moving the goods into and out of storage.  Note that the costs for moving the goods into and out of storage remain deductible even if the goods are in storage more than 30 days.
• Expenses not reimbursed by your employer, such as extra crating, shipment of unusual items, tips to van line staff, etc.

Additional tax season filing tips:

Tax Reform Eliminates Moving Expense Deduction-The Impact on Corporate Relocation

The finals days of 2017 saw the House/Senate pass the most sweeping change to US tax code in decades;  the Tax Cuts and Jobs Act.   The act, now signed into law, includes changes that will impact relocation and talent mobility programs.

Perhaps the biggest change to the tax code is the elimination of the exclusion/deduction for moving expenses such as the shipment of household goods, storage, and final move costs.   For corporations that gross up for taxable reimbursements, this will result in thousands more in tax gross-up dollars per transferring employee. Written policy language will also require revision along with necessary adjustments to relocation budgets to allow for the increased cost of tax gross up.  The average company cost for moving/storing household goods of transferring employees and final move is over $14,500.  It is important to remember that corporations can still deduct moving expenses it pays to or on behalf of employees.

Prior to passage of the Tax Reform Bill certain moving expenses were considered excludable/deductible if certain criteria were met. The criteria included meeting the time and distance tests.  The transferring employee needed to commence work in the new job (at the new work location) and work full-time for at least 39 weeks within the first 12 months after the move.  He/she also needed to demonstrate that the new place of employment was at least 50 miles away from the old home than the old place of employment.   The new tax reform law effectively negates the need for the above criteria since moving expenses are no longer deductible/excludable.

 Additional Relocation-Related Tax Reform Implications

• The mortgage interest deduction was reduced to $750,000 from $1,000,000 for mortgages originating on or after December 15, 2017. This is likely to affect transferring employees looking to purchase homes in higher cost of housing areas.  Recruiting talent to relocate to these areas could become problematic.
• The state and local tax deduction is now capped at $10,000 in 2018 through 2025. This again could impact employees transferring into higher tax states as the cap will decrease the ability to deduct these items.
• Tax Rates and Income Brackets:  The law’s seven federal tax brackets will now have the following rates:

Relocation America International is actively working with our clients and prospects to insure their programs are fully compliant with the new tax law and relocation policies are updated to reflect the new tax reality.

The above information is for general information only and is not presented as tax advice. Please consult with your tax advisor prior to making decisions and taking any action.  For more information contact us at info@RAInternational.com or visit www.RAInternational.com