Many Americans and their accountants were lucky enough: they now have one more month to file the 2020 taxes.
The Internal Revenue Service and the Treasury Department extended the submission period for individuals to May 17 from April 15.
The move came after calls increased to extend the fiscal season, which began later than usual to accommodate the third round of stimulus payments, which the IRS distributes.
This year as of March 12, the IRS has received more than 66 million income tax returns and has processed more than 58 million, according to the agency. They have also sent more than 42.5 million returns, most of which have been deposited directly into taxpayers ’bank accounts. The average return so far is $ 2,967.
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Timely tax filing is extremely important to many this year. It is the only way to get a refund if you owe it. It is also the number of Americans who can claim stimulus payments prior to those who were eligible but did not receive them.
The pandemic has complicated this year’s filing process and the $ 1.9 trillion U.S. bailout plan signed in early March made changes that affect mid-season tax filing.
“Obviously, this is very, very different this year from anything we’ve ever dealt with before,” said Adam Markowitz, an agent enrolled at Howard L Markowitz PA CPA in Leesburg, Florida.
Here are some things to consider before submitting the file.
Stimulus payments
If you have a drop in income that would have made you eligible for any prior stimulus payments in 2020, or if you had an event such as having a baby that changed the amount you should have earned, you must file a tax return. and claim credit card recovery to recover that money.
If you were eligible for the last payment of $ 1,400 in the American Rescue Plan, you must also file your 2020 tax return so that the IRS has your information up to date and can send you a direct deposit, paper check, or debit card.
While this is the only way to get paid, you don’t necessarily have to rush to show up if you’re not ready yet; the IRS said it would review 2019 and 2020 tax returns and top-up people who became eligible for checks or would have obtained more based on 2020 returns.
Unemployment income
If you have unemployment insurance 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 the two partners got unemployed, are not taxable for those who had adjusted gross income below $ 150,000 by 2020.
This will save millions of Americans from a surprise tax bill at a difficult time. The IRS has published a spreadsheet for paper applicants to claim tax cuts and is working with the tax software industry to update online systems, meaning taxpayers must ensure that they have the correct forms before submitting them.
This can put some in a difficult situation, especially if they need to claim additional incentive payments or if they are waiting for a tax refund.
In addition, for those who had unemployment income in 2020 and who already filed and paid taxes they no longer owe, the IRS said no further action is needed. The agency plans to automatically process refunds for these people.
It’s a bad year to try to tax on your own because you have to be with someone who knows exactly what they’re doing.
Adam Markowitz
registered agent, Howard L Markowitz PA CP
Now there is more time to present it
Certainly, not all taxpayers are subject to the new May 17 deadline. Those who make estimated tax payments still have an April 15 first quarter deadline to send the money.
And the new date only applies to federal taxes. States set their own deadlines and cannot extend seasons in line with the federal government.
In addition, the IRS did not withdraw the extension deadline: if someone needs even more time to file their taxes, they must file a Form 4868, which gives them until Oct. 15 to file the 2020 returns. However, taxes owed to the IRS have yet to be paid by May 17, and if paid later, penalties and added interest may result.
This year of every year, experts recommend that taxpayers be able to file for professional help, especially if they had situations such as unemployment income that would add complexity to their return.
“It’s a bad year trying to tax on your own because you have to be with someone who knows exactly what they’re doing,” Markowitz said.
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