Key Takeaways
- 70 years of April 15 deadlines.
- What's due today.
- Who gets automatic disaster extensions.
- How to file, how to pay.
- What to do if you can't file or pay.
- IRS turmoil update.
- Trump rate increase talk continues.
- Tariff challenges.
- Laundry Day, Bunion Day.
Deadline day. In 1955, 1 out of 3 U.S. homes still lacked indoor plumbing. Fewer than half of dwelling units had central heating, and air conditioning was a luxury enjoyed only by a fraction of the top 10%. Dishwashers were rare, microwaves, cell phones, and computers non-existent. And don't get me started on that era's adding machine technology.
Fortunately, many things have improved since then. But one thing is still stuck in 1955: the individual tax return deadline. Despite the addition of thousands of pages to the Internal Revenue Code, the invention of multiple forms of capital gains and dividends, the dawn of the pass-through era, and countless other complications, the tax deadline is still the same as it was in 1955, when the deadline was moved back from March 15.
It's not just 1040s that are due today.
- Gift tax returns are due today on paper Form 709, unless you extend with paper Form 8892.
- Calendar-year Trust and estate income tax returns are due today on Form 1041, unless extended with Form 7004.
- Calendar-year C corporation returns are due today on Form 1120, unless extended on Form 7004.
- First quarter estimated taxes are due for individuals, trusts and calendar-year C corporations today.
Many states also have returns due today.
If for some reason you are unable to file today - and yes, there are all sorts of developments in the past 70 years that make it harder to meet an April 15 deadline - you can extend your 1040 easily, either by filing a paper Form 4868, or by extending electronically. No matter your income level, you can extend for free using IRS Free File. If you have to pay with your extension, an online extension payment also extends your return.
How should you file? If you can file electronically, that's how you should file, whether you are filing your return or are just extending. The IRS struggles to process paper returns. Paper returns can delay your refund by months, and the impending mass layoffs in the IRS are unlikely to improve processing times. Despite some silly things you may have read, e-filing is more secure than trusting your return to the vagaries of the postal service. And no, post offices don't stay open late on April 15 anymore.
If you must file on paper, document your filing. Certified Mail, Return Receipt Requested, is the standard. Yes, it costs $4.85, but it more than pays for itself if the IRS asserts a late filing penalty. If you really are a last-minute filer and you get to the post office after it closes, you can use an authorized private delivery service. Be sure you use the right delivery option; for example, UPS Next Day Air qualifies, but UPS Ground does not. Save your shipping documents.
How should you pay? Consider one of the IRS electronic payment options:
- Using IRS individual Online Account;
- the Electronic Federal Tax Payment System (EFTPS);
- paying with a credit card, debit card or digital wallet.
Otherwise, you put yourself at the mercy of the postal service and its processing centers.
What if you can't pay? It's still best to file or extend anyway. If you fail to file or extend on time and you have less than 90% of your balance due paid in, you pay a 5% penalty for being one day late, plus 5% for each additional month, up to 25%. If you file or extend on time, that comes down to 1/2% per month. Interest applies to any underpayment as well.
Can I pay in installments? Most taxpayers who owe can qualify online for a payment plan. It doesn't make interest or all penalties go away, but it helps.
For all of you day traders, today is also a deadline - for 2025 taxes. Today is the last day to make a Section 475(f) mark-to-market election for this year. Those making this election are required to recognize unrealized gains and losses at the end of each year.
The gains and losses for electing taxpayers are ordinary - easing the pain of the $3,000 annual limitation on capital loss use. As day traders typically only hold their investments briefly, the loss of advantageous long-term capital gain treatment may not hurt much.
But if you had big trading losses in 2024, it's too late. The 2024 mark-to-market election was due a year ago.
Disaster Deadline Relief
All of Arkansas qualifies for disaster tax relief; various deadlines postponed to Nov. 3 - IRS:
- Individual income tax returns and payments normally due on April 15, 2025.
- 2024 contributions to IRAs and health savings accounts for eligible taxpayers.
- Quarterly estimated tax payments normally due on April 15, June 16 and Sept. 15, 2025.
- Quarterly payroll and excise tax returns normally due on April 30, July 31 and Oct. 31, 2025.
- Calendar-year corporation and fiduciary returns and payments normally due on April 15, 2025.
- Calendar-year tax-exempt organization returns normally due on May 15, 2025.
Deadline relief applies to all of Tennessee and parts of West Virginia, Kentucky and California. Visit the IRS disaster relief page for details.
IRS Turmoil update
IRS Chief Information Officer to Resign - Benjamin Valdez, Tax Notes ($):
...
Uppal’s decision adds him to the raft of top officials — including acting Commissioner Melanie Krause — who have decided to leave the IRS in recent weeks amid changes at the agency, including the ongoing reduction in force and an agreement between Treasury and the Department of Homeland Security that requires the IRS to share taxpayer data for immigration enforcement.
It also comes while staff from the Department of Government Efficiency are scrutinizing the agency’s IT projects.
Senate Democrats Seek Probe Into ‘Fake’ Credits Tied to IRS Pick - Chris Cioffi and Erin Schilling, Bloomberg ($):
...
The letter cited reporting by Bloomberg Tax on claims by White River Energy Corp., a publicly traded oil and gas company, that it received billions of dollars in tribal tax credits that wealthy investors could buy for as little as 60 cents on the dollar. It claimed to have a joint venture with a tribal entity that gave it access to the credits—though the Cherokee Nation, mentioned in some third-party promotional materials as the tribal partner, disavowed any association and sent White River a cease-and-desist letter.
Treasury told Bloomberg Tax for that article that the credits don’t exist. The IRS affirmed that to the Finance Committee’s Democratic investigators.
Commissioner-designate Long's X home page still says "DM me to save 40% on your taxes. We have a new traunch of tax credits just out!"
The Fight for the 2026 Tax Law
Bessent Says ‘Everything’s On the Table’ for Taxes on Wealthiest - Daniel Flatley, Bloomberg News:
...
Bessent has said that he is working to expand the 2017 cuts to include no taxes on tipped wages and overtime pay, and a new benefit for Social Security recipients. He also said he wants to give people the ability to deduct the interest payments on their auto loans.
Republicans Ponder the Unthinkable: Taxing the Rich - Andrew Duehren, New York Times:
For Republicans struggling with the roughly $4 trillion cost of continuing the 2017 cuts, letting the top rate snap back to 39.6 percent would be an easy way to reduce the cost of the bill. Not only would such a move save roughly $366 billion, according to the Tax Policy Center, a think tank in Washington, it could also help inoculate Republicans against attacks from Democrats accusing them of seeking to cut taxes for the rich at the expense of programs that help the poor.
So could creating another income bracket. Right now, the 37 percent rate kicks in on earnings above $609,351 for a single American. Another option would create a new income threshold, say $1 million per year, and tax earnings above that level at a higher rate.
Trump Tariffs
Constitutional Challenge Could Roll Back Trump's Tariffs - Michael Smith, Tax Notes ($):
...
The complaint was filed and supported by the New Civil Liberties Alliance. In an April 3 release, Mark Chenoweth, the alliance's president, said, “No prior president ever thought the IEEPA allowed him to set tariffs. Reading this law broadly enough to uphold the China tariff would transfer core legislative power. To avoid that nondelegation pitfall, the court must construe the statute consistent with nearly 50 years of unbroken practice and decide it does not permit tariff setting.”
Trump sued over ‘Liberation Day’ tariffs - Zach Schonfeld, The Hill:
They did so on behalf of a group of five small businesses impacted by the tariffs: wine and spirits company VOS Selections, sportfishing e-commerce business FishUSA, electric toy designer MicroKits, pipe maker Genova Pipe and women’s cycling apparel brand Terry Precision Cycling.
...
It adds to a lawsuit filed by the New Civil Liberties Alliance earlier this month challenging some of Trump’s additional tariffs imposed on China.
Blogs and Bits
6 last-minute tax-filing tips - Kay Bell, Don't Mess With Taxes. "1. Get an extension. Your wisest move at this point, even if you are close to finishing your Form 1040 and accompanying schedules, might be to get more time. You don’t want to make a mistake in your rush to be done with filing."
Today Is Tax Day - Russ Fox, Taxable Talk. "Ideally, file your extension electronically (you can do so at IRS Direct Pay); if not, mail a check using certified mail with your extension voucher."
Ease Your Tax Day Stress With Delicious Deals, Discounts, And Freebies - Kelly Phillips Erb, Forbes. "Krispy Kreme. On Tuesday, April 15, guests who purchase any dozen doughnuts at regular price in shop can receive a second Original Glazed® dozen for only the sales tax in their state."
File, but file right.
California Restaurant Owner Sentenced for COVID-19 and Tax Fraud Schemes - US Department of Justice (Defendant name omitted, emphasis added).
According to court documents and evidence presented at trial, Defendant was the majority owner of Rockstar Dough LLC and Chicken Feed LLC, both of which operated restaurants in the San Diego area, including Streetcar Merchants in the North Park neighborhood. He conspired with others to underreport over $1.7 million in gross receipts on Rockstar Dough’s 2020 corporate tax return and COVID-19 relief applications. Defendant’s businesses fraudulently received $1,773,245 in COVID-related Paycheck Protection Program loans and Restaurant Revitalization Fund grants, two programs created to provide financial assistance to American suffering economic harm as a result of the COVID-19 pandemic.
Defendant and his co-conspirator misappropriated COVID-19 relief program funds by making substantial cash withdrawals from their business bank accounts, purchasing a home in Arkansas, and keeping more than $2.4 million in cash in Defendant’s bedroom.
That is not a recommended cash management practice.
Not filing at all is a reliable way to draw IRS scrutiny. File. Report your income. And don't keep your cash in the bedroom.
What day is it?
It's Tax Day, of course. If that's not enough fun, it's also National Bunion Day and National Laundry Day!
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