• Sun. Oct 24th, 2021

The tax day is Monday. Here’s everything you need to know about filing your 2020 taxes

Byeditorial

May 14, 2021

(CNN) – Okay, last call.

Next Monday, May 17, is the official deadline for people to file their 2020 federal tax return and, in most cases, their state tax return as well.

It is a month later than usual, thanks to the pandemic. But the submission deadline is not the only thing that has changed. Many of the upheavals in the last year have caused other changes to your taxes. Due to the covid crisis, there are many new and revised provisions and important dates that you will need to know before filing your return this year.

Here are some of the most important.

Why on May 17?

While the original filing and payment due date was April 15, the IRS has pushed the deadline to May 17 to give individual taxpayers, tax preparers, and the IRS itself more time to review the many changes affecting 2020 taxes by latest covid aid package. As it was, the filing season began a few weeks later that year as the Internal Revenue Service (IRS) had its hands full administering provisions, such as stimulus checks, from aid packages prior to covid.

Unless you choose to request an extension (see question below), you must file and pay any remaining federal income taxes due for 2020 by May 17.

That way, you will avoid being affected by possible fines for late presentation or payment.

But if you miss the filing or payment deadlines, you may be eligible for penalty relief for the first time.

There are two exceptions to the new extended federal deadline.

The first applies to anyone who pays estimated taxes, including many small businesses. Your regular April 15 payment is still due on April 15.

The second applies to anyone living in Texas, Oklahoma, and Louisiana, which were hit hard by the February storms. The IRS extended the federal tax deadline for residents of those states to June 15.

So I also have more time to file my state taxes?

In most cases.

Although the IRS extended the federal filing deadline, it was up to individual states to set their own tax deadlines.

And most have extended their filing deadlines to May 17 to align with the federal calendar. They include Alabama, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, New Mexico , New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Vermont, Virginia, West Virginia, and Wisconsin.

The filing dates for some states differ. They are Hawaii, April 20; Iowa, June 1; Maryland, July 15; and Oklahoma on June 15, although technically that only applies to tax payments, while returns still had to be filed by April 15.

In Louisiana, the deadline is May 17, although residents living in federally declared disaster areas due to the February winter storm have until June 15.

Do I have more time to make contributions to my IRA and my health savings account?

Yes. You now have until May 17 to make 2020 contributions to your IRA, Roth IRA, Health Savings Account, Archer Medical Savings Account, and Coverdell Education Savings Account.

Can I request an extension to file my 2020 return?

Yes. You can get an automatic five-month extension to file your 2020 federal income taxes, which means they won’t be due until October 15. To do so, submit your application to the IRS by May 17.

But keep in mind that an extension to file is not an extension to pay what you owe. You must still pay any remaining federal taxes due on your 2020 income by May 17 if you want to avoid a possible late payment penalty.

And if you are owed a refund, taking longer to file your taxes means you will have to wait longer to receive your refund.

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When can I expect my refund?

Refunds are generally issued within 21 calendar days of receipt of your return by the IRS. The fastest way to receive yours is to e-file and choose direct deposit, notes the IRS.

But this year, there is an unusually large backlog of returns to process from both 2019 and 2020. As of April 22, there were more than 29 million returns being held for manual processing, according to National Taxpayer Advocate Erin Collins. Therefore, refunds for that batch are likely to be delayed.

The IRS has also said that it is taking longer to process documents sent by mail, such as paper tax returns and correspondence related to the tax return, for example, if the IRS requested more information or found an error in the calculations. of a declarant.

IRS Commissioner Rettig told lawmakers on April 13 that any statement that goes through the agency’s error resolution service is taking 10 to 14 days to process, compared to a typical three to five days in a normal filing season.

To find out if your refund is being processed, you can check the IRS tool “Where’s my refund?” either within 24 hours of the date the agency indicates it has received your e-filed return or four weeks after you mailed your paper return. But keep in mind that the tool won’t tell you if the IRS needs more of your information or when it plans to release your refund, Collins blogged.

Are my stimulus payments taxable?

No. The money is tax free.

But some people who are eligible for the money did not receive the first two rounds of payments, mainly those whose 2019 income was higher than their 2020 income or people who did not file tax returns for 2019 or 2018. They will be able to receive the money that is owed to them through their federal income tax return whenever they claim the recovery refund credit.

That credit will reduce your income tax liability dollar for dollar. And to the extent that the credit exceeds your tax liability, you will get the rest as a refund.

Are my unemployment benefits taxable?

Yes, but for households with modified adjusted gross income below $ 150,000 last year, the first $ 10,200 in unemployment benefits for each taxpayer in a household will be exempt from federal income tax, thanks to a provision in the latest covid relief package enacted by President Joe Biden.

Also, when determining if you’re eligible for the $ 10,200 exclusion, you don’t have to count any income from your unemployment benefits as part of your modified AGI calculations, according to Mark Luscombe, chief federal tax analyst at Wolters Kluwer Tax & Accounting. .

For anyone who filed their tax return before the latest covid relief package took effect in mid-March, the IRS said they don’t need to file an amended return unless the exclusion makes them eligible for more tax credits. and deductions that were not available. claimed on your original return. Otherwise, the agency said it will recalculate your taxes incorporating the $ 10,200 exclusion and will either refund any resulting overpayment or apply it to other taxes you owe.

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Of course, if you live in a state with an income tax that also levies unemployment compensation, you should also check the website of your state’s department of revenue to see if it has decided to follow the IRS and exclude the first $ 10,200. state income tax.

Whether or not you qualify for the $ 10,200 exclusion, keep in mind that most unemployment compensation is treated as taxable income, both by the IRS and by most states (the exceptions are Alabama, Alaska, California, Florida, Montana, Nevada, New Hampshire, New Jersey, Pennsylvania, South Dakota, Tennessee, Texas, Virginia, Washington, Wisconsin, and Wyoming).

If you did not elect to have any income tax withheld from your unemployment payments during the year, the full amount of the tax will be assessed when you file your return.

But if your 2020 income was very low because you did not work for a large part of the past year, it is unlikely that you will have to pay a check to the tax collector. Instead, you’ll see your federal and state refunds reduced by the income taxes you owe on your unemployment benefits.

What other new tax changes related to the pandemic should I know about?

Congress made a number of changes to tax benefits, such as modifying the rules to make the Earned Income Tax Credit more generous or creating new ones for individuals and small business owners to provide pandemic relief.

Small business owners who received a tax-free forgiven loan from the Paycheck Protection Program can still deduct the business expenses they paid with the loan money.

Eligible self-employed persons can claim a new sick leave and family leave tax credit that was created by the Families First Coronavirus Response Act.

And finally, people who take the standard deduction can now take a new charitable deduction even if they are not itemizing. Note that the deduction can only be taken for contributions made to an IRS registered charity known as a 501 (c) (3), which would rule out many of the online fundraisers for individuals or businesses struggling during the covid crisis.

Are there new tax breaks for students?

Yes. The IRS has advised that if you received any emergency financial assistance grants related to the pandemic in 2020, you do not have to include that money in your gross income calculation.

Also, even if you used any portion of those grants for qualified tuition and related expenses in 2020, you may still be eligible to claim a tuition and fees deduction, the American Opportunity Credit, or the Lifetime Learning Credit on your return.