Many Americans and their accountants have been lucky: they now have an extra month to file 2020 taxes.
The Internal Revenue Service and Treasury Department extended the filing deadline for individuals to May 17 from April 15.
The move came after calls increased to extend the tax season, which started later than usual to allow for the third round of stimulus payments the IRS is handing out.
According to the agency, this year through March 12, the IRS received more than 66 million income tax returns and processed more than 58 million. They have also made more than 42.5 million repayments, most of which have been deposited directly into taxpayers’ bank accounts. The average payback to date is $ 2,967.
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Filing taxes on time is extremely important to many this year. It’s the only way to get a refund if you owe one. It’s also how many Americans can claim past stimulus payments they were eligible for but didn’t receive.
The pandemic has complicated this year’s filing process, and the US $ 1.9 trillion bailout plan signed into law in early March has made changes affecting mid-season tax returns.
“This is clearly something very, very different this year from anything we’ve ever experienced,” said Adam Markowitz, a registered agent with Howard L Markowitz PA CPA in Leesburg, Florida.
Here are a few things to check before submitting a file.
Stimulus Payments
If your income fell in 2020 that would qualify you for earlier incentive payments, or if an event like having a baby changed how much you should have received, then you should file a tax return and claim the chargeback. discount credit to get that money back.
If you were eligible for the final payment of $ 1,400 in the American Rescue Plan, you must also file your 2020 tax return so that the IRS has your updated information and can send you an automatic deposit, paper check, or debit card.
While this is the only way to receive payment, you don’t necessarily have to rush to file a file if you’re not ready yet – the IRS said it would look at both 2019 tax returns as 2020 and people eligible for checks or would have gotten more based on 2020 returns.
Unemployment income
If you got unemployment benefits in 2020, the American Rescue Plan made changes to what is considered taxable income. Now, the first $ 10,200 of those benefits – or $ 20,400 for a couple filing jointly, when both partners became unemployed – are not taxable for those who had adjusted gross earnings of less than $ 150,000 in 2020.
That will save millions of Americans from a surprise tax bill at a difficult time. The IRS has released a worksheet for paper filers to claim the tax break, and is working with the tax software industry to update online systems, which means taxpayers must ensure they have the correct forms before filing.
This can put some in a difficult situation, especially if they need additional stimulus payments or are waiting for their tax refund.
Additionally, for those who had unemployment income in 2020 and have already filed and paid taxes that they no longer owe, the IRS said no further action is needed. The agency plans to automatically process refunds for these individuals.
It’s a bad year to pay taxes on your own because you need to be with someone who knows exactly what they’re doing.
Adam Markowitz
enrolled agent, Howard L Markowitz PA CP
Now there is more time to archive
Of course, not all taxpayers are covered by the new May 17 deadline. Those making estimated tax payments still have an April 15th deadline for the first quarter to submit the money.
And the new date only applies to federal taxes. States set their own deadlines and are not allowed to extend their seasons in accordance with the federal government.
Further, the IRS hasn’t postponed the renewal deadline – if someone needs even more time to file their taxes, they must file a Form 4868, which gives them until October 15 to file their 2020 returns. However, any taxes due by the IRS are still due on May 17, and paying them later can result in penalties and additional interest.
This year of all, experts recommend that taxpayers get professional help with filing applications, especially if they had situations like unemployment income that would complicate their returns.
“It’s been a bad year to pay taxes on your own because you have to be with someone who knows exactly what he’s doing,” said Markowitz.
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