Many Americans and their accountants had a stroke of luck: They now have an extra month to file their 2020 taxes.
The Internal Revenue Service and the Treasury Department extended the filing deadline for individuals from May 17 to April 15.
The move came after calls to extend the tax season increased, which began later than usual to accommodate the third round of stimulus payments, which are distributed by the IRS.
This year through March 12, the IRS has received more than 66 million individual income tax returns and processed more than 58 million, according to the agency. They have also sent more than 42.5 million refunds, most of which have been deposited directly into taxpayers’ bank accounts. The average refund so far is $ 2,967.
More from Invest in You:
Suze Orman: Don’t reverse your stimulus controls. This is what you should do
Women are more financially stressed. Here’s how to get over it
Women lag behind men when it comes to saving for retirement. Covid made it worse
Filing taxes on time is extremely important to many this year. It is the only way to get a refund if one is owed to you. It is also the number of Americans who can claim previous stimulus payments for which they were eligible but did not receive.
The pandemic has complicated the tax filing process this year, and the $ 1.9 trillion American Rescue Plan that became law in early March made changes affecting mid-season tax filing.
“This is obviously something very, very different this year than anything any of us have dealt with before,” said Adam Markowitz, an enrolled agent at Howard L Markowitz PA CPA in Leesburg, Florida.
Here are some things to check before applying.
If you had a drop in income in 2020 that would have made you eligible for any previous stimulus payments, or you had an event like having a baby that changed the amount you should have received, you must file a tax return and claim the recovery refund credit. to get that money back.
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 the IRS has your updated information and can send you a direct deposit, paper check, or debit card.
While this is the only way to get paid, you don’t need to rush to apply if you’re not ready yet – the IRS said it would examine the 2019 and 2020 tax returns and top-up people who became eligible. for checks or would have gotten more based on 2020 returns.
If you got 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 both partners were unemployed, are not taxable for those who had adjusted gross income of less than $ 150,000 in 2020.
That will save millions of Americans from a surprise tax bill during a difficult time. The IRS has released a worksheet for paper filers to claim tax exemption and is working with the tax software industry to update systems online, which means taxpayers need to make sure they have the correct forms before to file the return.
This could put some in a tough spot, especially if they need to claim additional stimulus payments or are waiting for their tax refund.
Also, for those who had unemployment income in 2020 and have 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 individuals.
Now there is more time to present
Certainly not all taxpayers are subject to the new May 17 deadline. Those making estimated tax payments still have a first quarter deadline of April 15 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.
Additionally, the IRS did not delay the extension 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 tax owed The IRS is due May 17, and paying them later can result in penalties and added interest.
This year of every year, experts recommend that taxpayers get professional help filing, especially if they had situations like unemployment income that would add complexity to 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 they are doing,” Markowitz said.
REGISTER: Money 101 is an 8-week financial freedom learning course delivered weekly to your inbox.
CHECK OUT: Single mom earns $ 10,000 / month in Outschool: ‘I could never have made as much money as a regular teacher’ via Grow with Acorns + CNBC.
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.