Because of the coronavirus pandemic, 2020 may be a tax year like no other. Here are answers to some of your top questions.
For those last-minute tax filers who were rushing to get their returns done, there’s good news: you’ve been given a one-month reprieve.
Tax Day 2021 has been pushed back to May 17 from April 15 without penalties and interest, giving Americans more time to file their returns as the IRS implements sweeping tax code changes from the latest COVID-19 relief package.
It’s a busy time. Many Americans have tons of questions about their stimulus checks, taxes and unemployment aid after the American Rescue Plan became law.
So far, 127 million stimulus checks have been sent to Americans this month in the first two batches of direct payments. Many people are rushing to get their returns done so they can qualify for the latest round of stimulus aid, and they have questions like: Is it best to file now? Can I still file my return to qualify for a stimulus check? Do homeless Americans qualify for checks?
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Taxpayers are also grappling with questions on everything from unemployment waivers to child tax credits. And others want to know when they need to pay their state taxes, or if they face refund delays.
Here’s what you need to know:
(Photo: Getty Images)
Why was Tax Day extended to May 17?
The IRS pushed back the tax filing deadline by a month to Monday, May 17 instead of Thursday, April 15. The agency is dealing with staffing issues and outdated IT systems at a time when it’s also implementing sweeping tax code changes from the COVID-19 relief packages.
Last year, the 2019 tax deadline was extended three months until July 15, 2020, without penalties and interest, because of the massive economic shutdowns that went into place to stem the spread of the coronavirus.
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My stimulus check was mailed. How can I track my stimulus check?
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 third round of Economic Impact Payments will be based on a taxpayer’s latest processed tax return from either 2020 or 2019. That includes anyone who used the IRS non-filers tool last year, or submitted a special simplified tax return.
Before you start entering your information hourly, the IRS says the tool “updates once per day, usually overnight” and that people should not call the IRS. “Our phone assistors don’t have information beyond what’s available on IRS.gov,” the agency says.
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Do I still have a shot at qualifying for a check if I file now?
The situation is still very fluid.
If you didn’t qualify for the third round of stimulus checks based on 2019, but you do qualify based on 2020, the next best step is to file your 2020 taxes as soon as possible, tax experts say.
“If the IRS processes it in time, they’ll use the most recent year to qualify taxpayers for the third round of economic stimulus payments,” says Meredith Tucker, tax principal at Kaufman Rossin, one of the largest CPA and advisory firms in the U.S. “But, if you are passed over for round three because your 2020 tax return hasn’t been submitted or processed in time, then you should be able to claim a credit on your 2021 taxes.”
Mark Steber, chief tax information officer at Jackson Hewitt, agrees.
“Filing a tax return early is always a best practice and proven this year with the stimulus checks to those who have already filed,” says Steber. “As to filing now and still getting a check, the IRS has not detailed timing and impact, but it is certainly possible, especially if your tax situation changed from 2019 to 2020.”
The payments amount to $1,400 for a single person or $2,800 for a married couple filing jointly, plus an additional $1,400 for each dependent child. Individuals earning up to $75,000 get the full payments, as will married couples with incomes up to $150,000. Payments decline for incomes above those thresholds, phasing out above $80,000 for individuals and $160,000 for married couples.
If you are a head of household and not married, how does your stimulus payment change?
Single taxpayers with adjusted gross income of $75,000 or below will qualify for a full $1,400 economic impact payment. From here, it begins to phase out for those making above $80,000. It would be $2,800 for a married couple filing jointly, plus an additional $1,400 for each dependent child. Married couples with incomes up to $150,000 will get the full payment and will phase out for those earning above $160,000.
A Head of Household taxpayer isn’t eligible if their income is $120,000 or greater, although there is a phase-out between $112,500 and $120,000. Otherwise, a Head of Household will receive a $1,400 stimulus payment for themselves and each qualifying dependent with a Social Security Number, regardless of age, according to Steber.
Do federal beneficiaries qualify for a check?
Yes. Many federal beneficiaries who filed 2019 or 2020 returns or used the Non-Filers tool last year were included in the first two batches of payments, if eligible, according to the IRS.
But a date hasn’t been announced yet for when payments are expected for individuals who receive benefits but didn’t file taxes in 2019 or 2020 and also didn’t use the IRS’s Non-Filer tool.
Many Social Security recipients and other beneficiaries still haven’t received a third round of stimulus, according to the chairs of the House Ways and Means Committee. The Social Security Administration has sent information to the IRS that will help clear the way for almost 30 million people to receive their checks, lawmakers said Thursday.
“We are gratified that the SSA leadership finally recognized the urgency of the moment and acted swiftly on our ultimatum,” members of the committee said in a statement Thursday. “Now the IRS needs to do its job and get these overdue payments out to suffering Americans.”
More information about when these payments will be made will be provided on IRS.gov as soon as it becomes available, the IRS said.
If I don’t qualify for the third stimulus check based on my 2019 income but I do based on 2020, can I appeal to the IRS if they’ve already sent my check?
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.
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.
The IRS will continue to process stimulus payments weekly, including any new returns recently filed. 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.
“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.
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 earlier this month during testimony on Capitol Hill.
For taxpayers or households who either did not qualify for a third stimulus check based on their 2019 income or got less than they were due, they should file a return with the IRS and the agency will do a redetermination and issue a supplemental payment called a “top-up” based on the household’s 2020 income, as long as they’re eligible, according to Andy Phillips, Director of the Tax Institute at H&R Block.
The IRS will do a redetermination the earlier of 90 days after the tax filing deadline, which includes extensions, or Sept. 1, Phillips added.
“With the tax filing deadline being moved to May 17, the IRS will do the redetermination in late August,” says Phillips. “For anyone that had their 2019 returns initially used, the IRS will look to see whether they have a 2020 return that’s been processed for them. If a filer is due more money, the IRS will give them the money.”
(Photo: Getty Images)
Will I still need to file state taxes by April 15?
Yes. The extended deadline is only for federal income taxes. It doesn’t affect a state’s income tax deadline. But last year, states also eventually pushed back their deadlines after Tax Day 2020 was extended to July 15 due to the pandemic.
Earlier this month, Maryland pushed its state income tax filing deadline to July 15, according to Comptroller Peter Franchot.
It’s important that taxpayers check their state to see if they are moving their deadline.
Which states have their federal taxes delayed until June 15?
Texas, Oklahoma and Louisiana residents were previously given a June 15 deadline to file taxes because of the winter storm that swept through those states in February.
Those who earned less in 2020 than in previous years should prioritize filing their 2020 taxes ahead of the next stimulus payments.
How do I check the status of my tax refund?
You can use the IRS “Where’s My Refund” tool to check the status of your tax refund. Enter your Social Security number or ITIN, your filing status and your refund amount. There is also a mobile app, called IRS2Go, that you can use to check your refund status.
Could Tax Day be delayed again?
It’s unlikely but not impossible, experts say.
Any taxpayer who feels they will need more time to file their 2020 income taxes can get an automatic extension by filing Form 4868 and will have until October 15 to do so. But pay at least 90% of your tax bill by May 17 to avoid additional penalty and interest on any balance due, tax professionals caution.
Will tax refunds be delayed longer for Americans as the IRS tries to implement tax code changes in the midst of tax season?
Roughly 7.6 million returns haven’t been processed yet so far this tax season, according to IRS filing statistics through the week ended March 12. That’s nearly three times the number in the same period last year, when 2.7 million faced delayed processing.
Experts say that most Americans shouldn’t expect a major delay in their refunds.
“IRS has said there are no delays in tax refunds, unless tax returns trigger a closer look with information that warrants additional consideration as with significant changes from prior returns on information different than on IRS systems,” says Steber.
Still, some 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.
The IRS has said that the typical turnaround time for refunds is 21 days.
Some tax professionals are worried that millions of filers could face significant processing delays, especially those who already filed their taxes if they end up having to file an amended return to take advantage of new tax breaks on unemployment and dependent children from the latest relief package passed last week.
“The IRS did say that there would be some delays as the filing season didn’t start for 2020 until Feb. 12, and they are working diligently to factor in recent tax law changes,” says Eric Pierre, founder, CEO and principal of Pierre Accounting. “I recommend that you file electronically and have any refund due direct deposited.”
How can homeless people get their checks? What organizations can help them get the money?
Americans who are homeless are eligible for stimulus checks. There isn’t a requirement to be a taxpayer to receive one, according to tax experts.
People need to be a U.S. citizen or a resident alien, not a dependent of another taxpayer, and have a valid Social Security number to be eligible for all three stimulus checks.
“Homeless Americans will face several obstacles,” says Meredith Tucker. “First, they need to file a 2020 income tax return, even if they have no income to report.”
“The second obstacle is the fact that many homeless do not have bank accounts where the IRS can direct deposit their payments which means they’ll be waiting on checks or debit cards,” Tucker added.
The IRS does have a FreeFile program available that can be accessed by computer and smartphone, which means homeless individuals will need to arrange computer access through community agencies, libraries or friends, according to Tucker.
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For the first stimulus, people were able to use the IRS “non-filers tool” to register at IRS.gov, but the tool is no longer active. If people aren’t able to register on this tool, they will have to file a tax return to claim the Recovery Rebate Credit for the first two stimulus checks that were distributed last year.
If you don’t have a permanent address, your stimulus can be sent to a local post office, homeless shelter, or a place of worship. People should use an address of a local shelter, friend or family member, the Federal Trade Commission recommends.
For those who don’t have a bank account, the IRS can mail you an Economic Impact Payment Card, which works like a debit card.
United Way offers an online guide to help answer questions. You can contact United Way’s 211 Economic Impact Payment Helpline by calling (844)-322-3639 for assistance.
Campbell of TaxAct recommends that people find a local IRS Volunteer Income Tax Assistance (VITA) site to get free tax help if you qualify.
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Is there a maximum number of checks a household can receive (say, a family of 10)?
All dependents are now eligible for stimulus payments in the third round. The payment should include all eligible dependents and will be paid in one lump sum to whoever claims them, according to Tucker.
“There is no limit defined in the law, however normal IRS checks and balances probably will trigger a second look with a tax return with 10 family members but certainly is legal,” says Steber. “Remember, any individual who is a taxpayer’s dependent will not get their own check, instead they should be on the parent(s) return giving the parent(s) the additional money.”
Previously, if you had a child over the age of 16 or had an adult dependent, they didn’t receive a stimulus. The payments would amount to $1,400 for each dependent child. Eligible families will get a $1,400 payment per qualifying dependent claimed on their tax return, including college students, adults with disabilities, parents and grandparents.
How does the $10,200 tax waiver work for unemployment benefits?
As part of the American Rescue Plan, many taxpayers wouldn’t be required to pay taxes on up 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.
So it’s possible that if both lost work in 2020, a married couple filing a joint return might not have to pay federal income taxes on up to $20,400 in jobless benefits.
The special provision to waive taxes on some unemployment income applies to those who made less than $150,000 in adjusted gross income in 2020.
What if I already filed my tax return but want to claim the unemployment waiver?
More guidance will be available soon about what taxpayers need to do if they’ve already filed a federal income tax return but had jobless benefits in 2020, IRS officials said.
Taxpayers should “absolutely not” file an amended return at this time, IRS Commissioner Rettig said earlier this month. The agency may be able to adjust these returns for people who have already filed, Rettig said.
“We believe we will be able to monitor and we will be able to announce that individuals will not have to file amended returns to be able to take the exclusion for the $10,200 per person,” Rettig told lawmakers.
“We believe that we will be able to handle this on our own,” Rettig added. “We believe that we will be able to automatically issue refunds associated with the $10,200.”
For eligible taxpayers who already received refunds, the IRS will issue a second refund associated with the new tax exemption, Rettig said.
What should I do if I haven’t filed my return yet but want to claim the waiver?
The IRS issued instructions for those who haven’t filed a return yet, but want to claim the waiver of $10,200 on unemployment insurance.
“For those who haven’t filed yet, the IRS will provide a worksheet for paper filers and work with software industry to update current tax software so that taxpayers can determine how to report their unemployment income on their 2020 tax return,” the IRS said.
The IRS is currently accepting federal returns with the new waiver for those who haven’t filed yet. Depending on your tax company, that function may or may not be available due to software upgrades needed, according to Steber. Jackson Hewitt has made all the changes under the new rule, he added.
TurboTax and H&R Block updated their online software to account for the new tax break on jobless benefits received in 2020.
Will the unemployment waiver work for states taxes, too?
More than half of states levy an income tax on jobless benefits. States will have to decide if they will also offer the tax break on state income taxes.
It’s possible that some may still opt to tax the jobless aid, experts say.
Some already exempt taxes on unemployment, including California, New Jersey, Virginia, Montana and Pennsylvania. And some don’t levy state income taxes at all, including Texas, Florida, Alaska, Nevada, Washington, Wyoming and South Dakota.
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Is the child tax credit expanded?
Yes, the American Rescue Plan includes a temporary increase for the child tax credit for 2021.
The credit is worth $2,000 per child under 17 that can be claimed as a dependent.
It temporarily boosts the credit to $3,000 per child, or $3,600 per child under 6. It allows 17-year-old children to qualify for the first time.
The credit will begin to phase out for those earning more than $75,000 a year, or $150,000 for those married filing jointly. The IRS will look to prior-year tax returns to determine who qualifies for the higher credit. If a return for 2020 hasn’t been filed yet, the agency will look to 2019 returns.
Families who aren’t eligible for the higher child credit may still be able to claim $2,000 credit per child.
If you have more tax questions you can submit them here and read earlier answers below.
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