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March 19, 2021

New Tax Filing Deadline: How it Impacts You

Matthew Davis

Whether you have already filed your tax return or not, this new change of plans can impact your refund.

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UPDATED April 5th, 2021: Many states have now also postponed their filing deadline to May 17th to align with the Federal deadline. Check out the full list here.

 

The IRS announced on March 17 that the 2020 filing and payment deadline for individual tax returns was postponed from April 15th to May 17th. This was requested by members of both political parties, in order to give people more time to navigate the unusual circumstances of this year.

IRS Commissioner Chuck Rettig spoke to Congress yesterday and provided some clarification and useful information for all of us.

 

This is only for Federal Taxes and SOME State Taxes

You still need to file your state tax return (if you live in a state with an income tax) on your state’s deadline.

What does this mean for you?

Check with your state’s agency to find out what is the most up-to-date filing deadline.

 

Quarterly Tax Payments are NOT postponed.

The new deadline is only for individual 2020 tax returns. Freelancers must still pay their Q1 2021 estimated taxes  on April 15th, 2021.

What does this mean for you? 

Get ready to file and pay your quarterly taxes on the regular date.

 

No need to file amended returns for unemployment benefits

The American Rescue Plan signed into law last week made the first $10,200 an individual received in unemployment benefits entirely tax-free. For those who filed their 2020 taxes before the law was passed and therefore paid taxes on the full amount of unemployment they received, it created some confusion as to how they were going to get that money back. Initially, the thought was that folks would need to file an amended return. But the IRS commissioner said yesterday that he believed the IRS would be able to handle this internally and send the appropriate refund directly to the taxpayer without any additional paperwork. Stay tuned for more information.

What does this mean for you?

There’s still not 100% clarity on the process, so check in with your CPA in a week or so, and don’t rush into filing an amended return, you might not need to.

 

The Child Tax Credit could be delayed

Part of the American Rescue Plan was also an expansion of the Child Tax Credit (from $2,000 to $3,000 for kids 6 to 17 and up to $3,600 for kids under 6) and a new way of delivering that money with monthly payments to eligible parents starting in July (as opposed to just a credit on your tax return as it was previously). This required the development of a brand-new online platform for beneficiaries. But with the backlog and now the delay of when people can file, IRS commissioner Rettig says he might not have the resources to pull that off before July. “The same people who do our income tax processing [and process stimulus checks] are the people who need to develop that portal, so I don’t have the resources to devote to that portal until filing season ends,” he said. “We now have one month less to do the development.”

What does this mean for you?

Be aware of this possible delay and keep an eye out for when this platform will be released. We will make sure to inform you.

If you’re owed a refund or a stimulus rebate, you should still try to file as early as possible and you should try to file online. Filing online and providing a bank account for direct deposit, usually means you get your refund faster – the IRS says within 21 days on average.

You can then put 2020 behind you while gaining better visibility into your financial health for the coming months.

 

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Written by

Matthew Davis

Matthew Davis is a staff writer at Lili

Banking Designed for Freelancers

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