Many Americans and their accountants were lucky – they now have an extra month to declare their 2020 taxes.
The Federal Revenue Service and the Treasury Department have extended the filing deadline for individuals to May 17 from April 15.
The shift came after calls increased to extend the tax season, which started 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 personal income tax returns and has processed more than 58 million, according to the agency. They also sent over 42.5 million refunds, most of which were deposited directly into taxpayers’ bank accounts. The average refund so far is $ 2,967.
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Declaring taxes on time is extremely important for many this year. It is the only way to get a refund if you are in debt. It is also how many Americans can claim previous stimulus payments for which they were eligible but did not receive.
The pandemic complicated this year’s filing process, and the $ 1.9 trillion American Redemption Plan sanctioned in early March made changes that affected tax returns in the middle of the season.
“This is obviously something very, very different this year than anything that any of us have dealt with before,” said Adam Markowitz, an enrolled agent at the Howard L. Markowitz PA CPA in Leesburg, Florida.
Here are some things you should check before filing.
Stimulus payments
If you had a drop in revenue in 2020 that would have made you eligible for any previous stimulus payments, or had an event such as having a baby that changed how much you should have received, you need to file a tax return and claim for rebate rebate. credit to get that money back.
If you became eligible for the last $ 1,400 payment from the American Rescue Plan, you also need to file your 2020 income 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 need to rush to register if you’re not ready yet – the IRS said it would review tax returns for 2019 and 2020 and reload people who became eligible for checks or would have achieved more based on 2020 returns.
Unemployment income
If you obtained unemployment insurance benefits in 2020, the American Rescue Plan made changes to what is considered taxable income. Now, the first $ 10,200 of these benefits – or $ 20,400 for a joint process together, when both partners became unemployed – are not taxable for those who had an adjusted gross income of less than $ 150,000 in 2020.
This will save millions of Americans from a surprise tax bill during a difficult period. The IRS has released a spreadsheet for paper filers to claim tax breaks and is working with the tax software industry to update online systems, which means taxpayers must make sure they have the correct forms before submitting.
This can put some in a difficult situation, especially if they need to claim extra stimulus payments or are awaiting a tax refund.
In addition, for those who had unemployment income in 2020 and have filed and paid taxes they no longer owe, the IRS said that no further action is needed. The agency plans to automatically process refunds for these individuals.
It is a bad year to try to do taxes on your own because you need to be with someone who knows exactly what you are doing.
Adam Markowitz
enrolled agent, Howard L Markowitz PA CP
Now there’s more time to archive
Of course, not all taxpayers are subject to the new May 17 deadline. Those who make estimated tax payments still have a deadline of April 15 in the first quarter to send the money.
And, the new date only applies to federal taxes. States set their own deadlines and cannot extend their seasons in line with the federal government.
In addition, the IRS has not postponed the extension period – if someone needs even more time to file their taxes, they must submit a Form 4868, which is until October 15th to submit their 2020 tax returns. All taxes owed to the IRS still expire on May 17, and paying them later may result in additional fines and interest.
This year, among all the years, experts recommend that taxpayers seek professional help to file the lawsuit, especially if they had any situation such as unemployment income that increased the complexity of their return.
“It’s a bad year to try to do taxes on your own because you need to be with someone who knows exactly what you are doing,” said Markowitz.
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