The good news is I have another month to submit a 2020 return.
However, it is not just the submission deadline that has changed. Much of the turmoil over the past year has changed your taxes. Due to the Covid crisis, there are many new and revised provisions and important dates that you need to know before filing this year’s 2020 tax return.
Here are some of the most important ones.
So when will the taxes be paid?
The initial filing and payment deadline was April 15, but the IRS has postponed the deadline to May 17, 2020 from the latest Covid relief package to individual filers, tax preparers, and the IRS itself. Gave time to sort out many changes that affect taxes. .. Currently, the filing season began a few weeks later this year, as the IRS had full control over the provisions from the previous Covid bailout package.
Unless you choose to apply for an extension (see question below), you must apply for and pay the remaining federal income tax payable in 2020 by May 17.
That way, you can avoid potential submission delays and payment delay penalties.
However, if you miss the submission deadline or payment deadline, First penalty relief.
There are two exceptions to the new extended federal deadline.
The first applies to anyone who pays an estimated tax, including many small businesses. Your usual April 15th payment should still be paid on April 15th, and despite pressure from the legislators and tax preparer community, the IRS Commissioner Charles Retig said April 13th. He reiterated to lawmakers that the deadline would not be extended.
The second applies to everyone living in Texas, Oklahoma, or Louisiana, who was hit hard by the February storm. The IRS has extended the federal tax deadline for residents of these states until June 15.
If so, will I have more time to file a state tax?
In most cases.
Even if the IRS extends the federal tax return deadline, each state sets its own tax deadline.
State filers who do not postpone the deadline after May 17 may need to file a federal tax return by April 15 anyway.
This is because states often use federal adjusted total income or federal taxable income as a starting point for determining the income of filers subject to state tax.
However, most states have extended the submission deadline to May 17 to meet the federal deadline. They include Alabama, Arkansas, California, Colorado, Connecticut, Georgia, Illinois, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, New Jersey, New Mexico, New Mexico, North Carolina, North Dakota, Ohio. included. , Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Vermont, Virginia, West Virginia, Wisconsin.
Oklahoma has extended its deadline to June 15. And Maryland previously extended its submission deadline to July 15.
According to the Federation of Tax Administrators, the remaining states still have their original submission dates, most often April 15.
The current filing dates for some states and the District of Columbia are different. They are Hawaii on April 20th. Delaware and Iowa, April 30th. And DC, July 15th.
In Louisiana, affected residents living in the stricken areas declared by the federal government due to the February winter storm are until June 15th, but the deadline is May 17th.
Can I get more time to donate to an IRA and a health savings account?
Okay. By May 17, you must make a 2020 donation to an IRA, Roth IRA, Health Savings Account, Archer Medical Savings Account (Archer MSA), and Coverdell Education Savings Account (Coverdell ESA).
Can I apply for an extension to submit a 2020 return?
Okay. A five-month automatic extension for filing federal income tax in 2020 may apply. In other words, it will not expire until October 15th. Send a request To the IRS by May 17th.
However, keep in mind that the file extension is not the extension for paying the amount you owe. If you want to avoid potential delinquency penalties, you must pay the remaining federal tax on your 2020 income by May 17th.
Also, if you are obliged to refund, the longer it takes to file your tax return means that you will have to wait longer to get your refund.
When can I expect a refund?
Refunds are typically issued within 21 calendar days after the IRS receives the return. The fastest way for you to receive yours is to file electronically and choose a direct deposit, the IRS said.
Authorities also have time to process mailed documents such as paper tax returns and communications related to tax returns, for example if the IRS requests more information or finds an error in the filer’s calculation. It says that it will take. This year also began with a backlog of millions of 2019 returns that need to be processed.
IRS Commissioner Rettig told lawmakers on April 13 that the agency is still processing 1.7 million returns since 2019, and the usual 3-5 days for returns through the agency’s error resolution service. He said it would take 10-14 days. Season.
You can check the IRS tools to better assess when your refund will arrive “Where are the refunds?” Either within 24 hours of indicating that the agency has received the electronic file return, or within 4 weeks of mailing the paper return.
Is the stimulus payment taxable?
No. Money is tax exempt.
However, some people eligible for the money did not receive the first two rounds of payment. Mostly those who earned more than 2020 or did not file a tax return for 2019 or 2018. As long as they claim a refundable recovery rebate credit, they will receive the money to pay them through the federal tax return.
That credit will reduce your income tax debt in dollars. And as long as your credit exceeds your tax obligations, you will receive the rest as a refund.
Is my unemployment allowance taxable?
Okay. However, for households with adjusted total income of less than $ 150,000 last year, the first $ 10,200 of unemployment allowance for each taxpayer in the household will be deducted from federal income tax under the provisions of the latest Covid relief package signed by the president. You will be exempt. Joe Biden.
Also, according to Mark Luscombe, chief federal tax analyst at Wolters Kluwer Tax & Accounting, income from unemployment allowances will be counted as part of the modified AGI calculation when deciding whether to qualify for the $ 10,200 exemption. No need to. ..
For those who filed a tax return before the latest Covid Relief Package came into effect in mid-March, the IRS will file an amended tax return unless the exclusion does not result in a new tax credit or deduction. I said it wasn’t necessary. Claimed on your first return. Otherwise, the agency said it would recalculate the tax with a $ 10,200 exclusion and refund the resulting overpayment or apply it to other taxes.
Of course, if you live in a state with an income tax that also imposes unemployment benefits, check the state’s Revenue Department website and the state decides to comply with the IRS and exclude the first $ 10,200 from the state’s income tax. You need to check if you did.
Please note that most unemployment compensation, whether or not it is subject to the $ 10,200 exemption, is treated as taxable income in both the IRS and most states. (Exceptions are Alabama, Alaska, California, Florida, Montana, Nevada, New Hampshire, New Jersey, Pennsylvania, South Dakota, Tennessee, Texas, Virginia, Washington, Wisconsin, Wyoming.)
If you do not choose to withhold income tax from your unemployment allowance during the year, the total tax amount will be assessed at the time of filing.
However, if your income in 2020 is very low because you didn’t work most of last year, it’s unlikely that you’ll have to check with a tax officer. Instead, the income tax payable on the unemployment allowance reduces federal and state refunds.
What other new pandemic-related tax changes should I know about?
Congress has made many changes to tax incentives such as earned income tax credits and created new ones for individuals and small business owners to provide pandemic relief.
Small business owners who receive a tax-exempt mortgage from a payroll program can deduct the operating costs paid with the loan money.
Individuals who receive a standard deduction can receive a new charity deduction, even if it is not itemized.
Eligible self-employed persons can also claim tax credits for new sick leave and family leave created by the Family First Coronavirus Response Act.
Is there a new tax deduction for students?
Okay. If the IRS receives a pandemic-related emergency financial aid grant in 2020, No need to include That money in the calculation of your total income.
Also, if you use some of these grants for eligible tuition and related expenses in 2020, you may still be able to claim tuition and fee credits, US Opportunity Tax Credits, or Lifelong Learning Credits upon your return. There is.
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Tax Date: IRS Postpones Tax Filing and Tax Deadline for 2020 from April 15, 2021 to May 17, 2021
Source link Tax Date: IRS Postpones Tax Filing and Tax Deadline for 2020 from April 15, 2021 to May 17, 2021