IRS pushes tax season to later date; what does this mean for stimulus checks
This year, we’re getting another automatic extension, but it’s not quite as generous. The recently shifted filing deadline is just adding to the remnant confusion after a tumultuous 2020. You can get free help putting your taxes together and an extension if you won’t be able to finish in time, despite the extended deadline. Other Americans who made sure to file electronically on Feb. 12 when tax season kicked off contacted USA TODAY this month and said they were still waiting for the IRS to process their returns.
How does the $10,200 tax waiver work for unemployment benefits?
By filing a return and showing you were eligible for the credit but didn’t receive it, you can claim the stimulus. As part of the American Rescue Plan, many taxpayers wouldn’t be required to pay taxes on up Irs Tax Season 2021 Kicks Off Today From Stimulus Checks To Unemployment to $10,200 in unemployment benefits received last year. The exclusion is up to $10,200 of jobless benefits for each spouse for married couples. To speed up refunds during the pandemic, the IRS urges taxpayers to file electronically with direct deposit. Free File Alliance, an IRS program that partners with private companies to provide free tax preparation to millions of filers, is now available to those whose adjusted gross income was $72,000 or less in 2020.
The IRS should provide flexibility for individuals and businesses seeking to comply with and understand their tax obligations for the year while looking forward to ways that would simplify tax compliance and the filing process. The December coronavirus relief package included an adjustment to the way the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) are calculated for the 2020 tax year. Normally, both credit amounts are calculated based on earned income and phase in over time for lower-income earners. The phase-in with earned income means that an economic downturn can lower the value of credits for people who may have lost their incomes due to the pandemic.
To secure payment, you must claim the refundable Recovery Rebate Credit. The credit will be awarded in the same amount as the stimulus payment for which you are eligible. If a credit exceeds your tax liability, the rest will be sent to you as a refund.
Who qualifies for $1,400 IRS stimulus checks? Here’s how to see if you get one
If you still don’t receive a stimulus, the IRS said they will reconcile this sometime this year, according to Curtis Campbell, President of TaxAct, a tax preparation software. The IRS has until the end of the year to issue the stimulus payments for 2021 and will be reviewing returns for 2020. As the agency continues processing tax returns, additional payments will be made, tax experts say.
Table 5. 2025 Earned Income Tax Credit (EITC) Parameters
Get ready for one unruly tax season where many filers will face longer tax refund delays, the rules of the game for key credits have changed, and many remain angry about stimulus checks and tax refunds from last year that never showed up. The IRS already had received 39.6 million individual income tax returns by Feb. 14, 2020, and the bulk of those returns — 38.3 million — had been processed. A challenging tax season ahead kicks off Friday, as the Internal Revenue Service finally begins processing 2020 federal income tax returns.
Estate Tax
The IRS is still dealing with returns from last year, so if you are looking for a quick refund, get your returns in early. The IRS said it needs the extra time to program its systems to reflect new tax rules that were signed into law Dec. 27, plus the IRS has been busy sending out the second round of Economic Impact Payments in January. “It’s retroactive. This is for 2020,” according to Kathy Pickering, chief tax officer at H&R Block. If you purchase a product or register for an account through a link on our site, we may receive compensation.
The Columbus, Mississippi, resident, who makes $11 an hour as a personal shopper at Walmart, has fallen a few months behind on her car payments after her hours were reduced amid the coronavirus pandemic. If you were forced to pull money out of a retirement account to help cover your costs during the pandemic, you have three full years to pay that back without penalties. If you’re an employee of a school district or an automaker, for example, the tax rules don’t allow you to claim a home office deduction for unreimbursed business expenses relating to working from home. Lots of people will be disappointed because they won’t get a tax break after packing up and taking their office jobs home during the pandemic. The provision will help taxpayers who lost jobs or hours during the pandemic in 2020.
- The likelihood of a third stimulus payment of up to $1,400 for individuals is on the table now.
- If you haven’t filed a 2021 tax return yet, you can still qualify for the credit — but you must do so by April 15, 2025, according to the IRS.
- The number of companies that are offering freebies this year is down significantly, as they try to recover from the downswing in business brought on by the pandemic.
- That way you can run the numbers to see what works to your advantage.
Many Americans who were potentially left with a surprise tax bill on that jobless aid are poised to benefit from the new exemption. Until now, jobless insurance had to be reported as taxable income and many would likely owe federal income taxes on those benefits. TurboTax and H&R Block are giving their customers head starts and the ability to submit their taxes now. Basically, you will already be in line to receive your tax return come the IRS’ Feb. 12 start date. With direct deposit, most taxpayers receive their tax refund in 21 days after processing.
Unemployment Insurance Benefits
- “To minimize headaches and get this money to eligible taxpayers, we’re making these payments automatic, meaning these people will not be required to go through the extensive process of filing an amended return to receive it.”
- You can get free help putting your taxes together and an extension if you won’t be able to finish in time, despite the extended deadline.
- However, if the check was cashed, the Treasury Department’s Bureau of the Fiscal Service will send you a claim package and then you have to follow the process it comes with.
- The IRS has until the end of the year to issue the stimulus payments for 2021 and will be reviewing returns for 2020.
- Without that testing, there could have been a delay in the turnaround time on refunds.
If you haven’t filed your 2020 taxes, but believe you qualify based on your income levels you should file your 2020 taxes to ensure the IRS has the latest information. You can use the IRS “Get My Payment” tool to find out when your next stimulus payment is expected to hit your bank account or be mailed. The changes aim to ensure that eligible people will receive any remaining stimulus money as a Recovery Rebate Credit when they file their 2020 returns, the agency said.
The IRS will do a redetermination the earlier of 90 days after the tax filing deadline, which includes extensions, or Sept. 1, Phillips added. For those who didn’t get a check based on their 2019 income, file a 2020 return and the IRS will recover their payment based on their updated return, IRS Commissioner Charles Rettig said Thursday during testimony on Capitol Hill. Of course, if you file for an extension, these penalties do not apply. If you can show reasonable cause for not filing, you’ll avoid them as well. And if you historically have filed on time, you might qualify for the First Time Penalty Abatement program, which will help you avoid any fees. First, you’ll need to estimate your tax liability, even if you haven’t calculated it precisely.
Ok, I’ve filed. Are there any 2021 Tax Day freebies I can enjoy?
The IRS and Treasury Department sent two rounds of economic impact payments to individuals in 2020 as part of broader coronavirus relief packages. The payments, sometimes called stimulus payments, were sent through direct deposit, paper check, or prepaid debit cards. Technically, the payments are tax credits advanced to individuals based on their 2018 or 2019 adjusted gross incomeFor individuals, gross income is the total of all income received from any source before taxes or deductions.
To avoid late filing penalties, the deadline for filing your tax return remains April unless you file for an automatic six-month extension. The maximum adjusted gross income allowed to obtain the earned income credit is up to $15,820 for those who are single with no children. “If the 2020 return hasn’t processed for some reason, the IRS will go off 2019 return information. Then, after tax season, if someone files their 2020 tax return and it is processed, the IRS will do a ‘true-up’ of the check between 2019 data and 2020 data,” says Campbell.
