WASHINGTON, April 13, 2018: Tax Day 2018 is almost upon us. Everybody knows you have to file your Federal Income Tax forms – namely, your 1040 or equivalent – on or before April 15 every year. Right? Oh, and if you owe the Feds more money, you need to send them a check (or a virtual check) for the difference by that date, too. Right?
Well, sort of. We get a little extra time this year to file our 2017 tax returns.
Ever hear of “Emancipation Day”?
Once again this year, as in 2017 (when we had to file our 2016 returns) American taxpayers are getting a tax filing deadline reprieve. It’s a little one, but a reprieve nonetheless.
The reason is well-known to denizens of The Swamp or its environs, like this writer. That’s because of an official Washington, D.C.-only holiday. Known as Emancipation Day, this official “state” holiday shows up every year on the day after tax day, April 16.
According to a short article by Sarah O’Brien via CNBC,
“The nation’s capital celebrates Emancipation Day to mark the date that President Abraham Lincoln freed slaves there in 1862. While it’s a local holiday, it affects when taxes are due.”
How does Emancipation Day affect Tax Day 2018?
Which brings us to an interesting Tax Day catch. Similar to the way Federal holidays work, if Emancipation Day’s official date falls on a weekend, its celebration gets rolled over into the next business day so folks won’t lose the holiday to the weekend.
This year, our normal Federal Tax Day, April 15, falls on a Sunday. Customarily, when Tax Day falls on a weekend, the due date for mailing in your Federal tax return would roll over to the next business day. In 2018, that’s Monday, April 16.
But whoops, no can do. April 16 is Emancipation Day in D.C. Even though Emancipation Day is not a Federal Holiday, the Feds treat it as one for purposes of filing income tax returns. If it happens to get bumped because of the weekend loophole. This, in turn, happens to affect Tax Day 2018.
To the best of our knowledge, no state other than the District of Columbia celebrates Emancipation Day. That said, however, we surmise that the powerful beings who run The Swamp figured that there was no point in penalizing District residents for celebrating their holiday. Likewise, there was no point in ruining that holiday by forcing those residents to file their income tax returns on the holiday. So giving District residents an extra day to file their returns when Emancipation Day and/or Tax Day fell on a non-weekday seemed only fair.
Except for one thing. What about the remaining 50 actual states? The simplest solution was just to take the District’s Emancipation Day holiday as the national norm for bumping Tax Day out for a day or two. How’s that for fairness?
So when are we supposed to file our tax returns this year?
Hence, your official 2017 income tax filing deadline this year, aka Tax Day 2018, is April 17, 2018. For those who still need to mail in their 2017 returns, you can meet or beat this year’s official April 17 deadline by making sure your return is postmarked before midnight, April 18. As we read the rulebook, if your return is postmarked on or after the stroke of 12 midnight at the beginning of April 18, you’re late. So mail earlier if you can.
Of course, you can still delay filing your 2017 return. In fact, you can legally file it as late as October 15, 2018 and you’ll still be cool with the Feds. IF you have a good reason for your delay, and IF you don’t owe the Feds any money.
If you actually do owe some money to the Feds, you’ll have to pony it up when you file that late return. Plus, you’ll likely get an additional bill for interest on that balance, computed back to April 15 when you didn’t file.
How can we get an automatic extension to file our 2018 taxes?
But remember: If you still need this extension, you’ll need to file IRS form 4868, the “Application for Automatic Extension of Time To File U.S. Individual Income Tax Return” on or before the official Tax Day 2018 filing date of April 17. Same postmark deal as a regular return if you’re mailing this form. You have to provide reasonable evidence as to why you need to file late, but currently, the IRS routinely allows this extension.
About late filing of tax returns
We’re actually pretty familiar with late filing, since we do it nearly every year. Why? We frequently invest in REITs and Master Limited Partnerships (MLPs) due to their generally high dividends, which help contribute to our income stream. Problem is, when it comes to Tax Day, many of these REITs and MLPs run on fiscal years that differ from calendar years and haven’t quite finished their own books by April 15 (or thereabouts).
Hence, the annual K-1 forms they need to send to shareholders (like us) start dribbling in, generally from February-March through as late as July.
Without these forms, we can’t fill in all the blanks on our individual returns. So we have to wait for all of them to arrive, which is, whenever. So, we file our 4868 – which we affectionately dub our “Delay of Game” form – prior to Tax Day. Then, we eventually fill out the rest of our fairly complex 1040 after the last of those K-1s arrives in our mailbox. So for us, Tax Day 2018 turns out to be the day we get our returns finished, sometime after April 17 but before October 15.
Why not a flat tax?
Yeah, it’s a complicated world out there. Since as early as 1972 or thereabouts, this columnist as agitated for a flat tax. That way, all of us could simply apply X percentage to our annual income, write a check to the Feds and send it in.
But, given that there are multitudes of businesses and fat cats who’ve managed to get industry carve-outs shoved into the U.S. tax code over many years, the flat tax, that ultimate “paperwork reduction form,” is not likely to happen anytime soon. All our flat-tax lobbying has been for naught.
FY 2018 returns filed in 2019 to adjust to recent GOP tax cut legislation
At least when we file our FY 2018 returns in 2019, we’ll finally get to see, for real, those nifty tax cuts the GOP and the Trump administration finally rammed through Congress in late 2017. Both Trump and the GOP hope taxpayers will remember this when they go to the polls in November 2018. Most taxpayers should already have noticed an increase in take home pay in their paychecks, assuming they updated their W-2 forms with their employer. But you never know. America 2018 feels like Short Attention Span Theater.
In the meantime, assuming you’re not awaiting more K-1s or other delayed documentation, enjoy your long, “tax-free weekend.” Or the real one if you live in D.C. and get an actual day off on Monday.
BTW, next year, Tax Day goes back to April 15, since it won’t fall on the weekend.