Ariel Go Jr.
Despite usually opening the tax season in late January, the Internal Revenue Service (IRS) delayed the start of the 2020 tax season to February 12, announcing that they would start accepting and processing tax returns then. The deadline for individuals to file their taxes remained on April 15 until a recent announcement from the IRS that the agency is postponing the filing deadline, giving taxpayers an additional month to file their returns. As of now, income tax and payments will be due on May 17. While this new change applies to individual taxpayers and families, including people paying self-employment tax, this relief does have an exception—it will not apply to the estimated tax payments that many small business owners owe for the first quarter of 2021.
With this filing extension, taxpayers are given additional breathing room to fulfill their tax obligations for 2020, which is considered one of the most complicated tax seasons in the past few years. The change comes from accountants and lawmakers calling for the IRS to put off the due date, especially with pandemic-related work changes that have disrupted taxpayer plans. Also, the 2020 filing season extension will allow the tax agency to adjust to the tax legislation changes that the American Rescue Plan Act has brought about. This plan, also known as the COVID-19 Stimulus Package, was signed into law by President Joseph Biden on March 11, in the middle of the tax season, which has added to an already complex season.
The IRS, which still needs to process millions of returns from the 2019 tax season, is experiencing difficulties with an exemption included in the coronavirus relief package. This exemption benefits taxpayers who received unemployment benefits in 2020 as the first $10,200 of those benefits will be considered tax-free. Only individuals, regardless of filing status, with incomes less than $150,000 are eligible for this exemption.
The IRS is now working on updating its computer systems with tax-software companies and will provide a worksheet for taxpayers filing paper returns. Questions and concerns regarding those who have already filed returns have come up as well. Instead of resubmitting returns or consulting with tax advisers on how to proceed, the IRS has announced that it will go through previously submitted returns and adjust the payments or refunds accordingly.
Besides the unemployment benefits exemption, the IRS has also been tasked with handing out a third of household stimulus payments. The IRS expects an even longer delay in processing tax returns and issuing refunds as it must prioritize the stimulus payments that the agency began sending out on March 15. The American Rescue Plan called for everyone in the United States, including dependents, to receive a check worth $1,400. According to the most recent update of the IRS on March 25, approximately 127 million checks, most of which were issued by direct deposit, have been sent out. This amount totals to around $325 billion.
Chuck Rettig, the Commissioner of the Internal Revenue Service, said in a statement, “This continues to be a tough time for many people, and the IRS wants to continue to do everything possible to help taxpayers navigate the unusual circumstances related to the pandemic.” Rettig also added that individuals are encouraged to file their income tax returns as soon as possible, especially those receiving refunds despite the tax filing extension.
The quickest way to get the refund is to file electronically with direct deposit as one’s form of receiving the money. People can track their refund status on the IRS website, but they should expect to receive their refunds within 21 days of filing.
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