Answering Questions About the New Deadlines For 2020 Tax Returns
Tax season is rarely a walk in the park. Even if you have the same salary from year to year, compiling financial records can be a chore.
Large purchases – like a home or car – can cause your annual tax burden to fluctuate. The growing gig economy means more and more people have to file multiple W-2s and 1099s. And if you plan to itemize deductions, you have to comb through and organize your receipts.
Additionally, 2020 was a difficult financial year for many Americans. In December, around 5.9 million people applied for continued claims for unemployment, meaning their initial benefits were running out and they needed to recertify their benefits.
The Impact of The COVID-19 Pandemic On Americans’ Finances
Now, a year after the novel coronavirus upended the American economy, many people are finally back to work. But a year of financial uncertainty will have lasting effects for many taxpayers.
Luckily, the Internal Revenue Service (IRS) is taking steps to mitigate the strain. Federal and state taxes are generally due on April 15th, but as with last year, that date has been adjusted.
Here is a video explaining some of the changes you can expect for filing your 2020 tax returns.
Below, find the answers to some common questions about these adjustments.
What Is the New Deadline to File Federal Taxes?
The COVID-19 pandemic hit American shores in March of 202, a little less than a month before the usual deadline for filing taxes. The IRS responded quickly and extended the filing deadline for 2019 taxes to July 15th.
The extra three months gave Americans additional time to compile their returns and pay any taxes owed. However, this extended deadline meant that taxpayers had only 9 months from the last tax season to complete their 2020 returns.
Luckily, the IRS has once again extended the deadline for filing federal taxes. 2020 tax returns are now due on Monday, May 17th, 2021.
Are My Tax Payments Still Due on April 15th?
This new due date also applies for any tax payments owed to the federal government. You can make payments on federal taxes up to Monday, May 17th, 2021.
What About My State Taxes?
41 state agencies have adjusted their filing deadlines to reflect these changes from the IRS.
The Georgia Department of Revenue has also changed the deadline for 2020 tax returns and payments. They are now also due May 17, 2021.
Georgians can take advantage of this added time and breath a little easier. If 2020 was a difficult financial year for you or your family, you have an extra month to get your ducks in a row.
Residents of Texas, Louisiana, and Oklahoma have still more time to file and pay their taxes. Due to damage caused by natural disasters, the filing deadline for thee three states has been extended to June 15, 2021.
Do I Have to Do Anything To Take Advantage Of The New Deadline?
These changes are automatic. You do not have to file any paperwork in order to take advantage of the change in deadline – either federally, or for your state.
What If I Pay Quarterly Taxes?
This change does not apply to quarterly estimated tax payments, which are still due April 15th, 2021.
What If I Need Even More Time?
If you do not believe you can complete your return by the adjusted date of May 17th, 2021, you can file for an extension. Once granted, your tax paperwork will not be due until October 15, 2021.
However, filing for an extension does not give you an extended deadline for paying your taxes. Even with an extension, the money you owe to state and federal agencies is still due on May 17th, 2021 (unless you are a resident of Texas, Louisiana, or Oklahoma).
If you do not pay estimated taxes y this date, you could accrue interest and penalties.
How Do I File for An Extension?
To file for an extension, visit IRS.gov. Submit an electronic form, and your new deadline for filing your return will be October 15th, 2021. Next, visit this link to make an estimated payment of your 2020 taxes.
How Do I Calculate My Estimated Taxes?
It is difficult to say how much you may owe on your taxes without first filling-out your tax return. If you have not owed taxes in the past and your income has not changed, it is likely that you will not owe anything on your last year’s return.
If you generally owe taxes and your salary has not changed, you can use your previous years’ payments as a guide.
However, this method is not foolproof. If your income varies from year to year, or if you purchased a home or took out a large loan, you may owe more than in the past.
Additionally, the 2017 Tax Cuts and Jobs Act has created annual changes to the tax code that will continue through 2026. Even if you are making the same amount of money now as you did in 2018, your taxes may be different.
If you underpay your estimated taxes, you could end-up owing additional interest and penalties.
Luckily, if you overpay on your estimated taxes, federal or state, you will receive a refund. If you decide to file for an extension, it is recommended that you pay more than you expect to owe.
How Will Unemployment Affect My Taxes?
If you collected unemployment in 2020, you may owe some taxes on those payments. Because unemployment payments are considered income, they are generally taxed as such. Usually, the IRS taxes unemployment at a rate of 10%, and each state has its own laws on taxing these payments.
However, under the American Rescue Plan, your first $10,200 of unemployment benefits will not be taxed. If you are married, file jointly, and you and your partner received unemployment benefits, that figure jumps to $20,400.
To qualify, individuals and married couples must have an adjusted gross income (AGI) under $150,000.
Do I Owe Taxes for My Stimulus Checks?
No. The economic impact payments, or stimulus checks, will not be taxed.
What If I Did Not Receive My Stimulus Checks?
If you did not receive stimulus payments, or only got partial payments, you must claim the Recovery Rebate Credit in order to receive your money. You have to file a tax return in order to make this claim.
Can I Do My Taxes by Myself?
While it is possible to file one’s taxes oneself, it can be a tricky – and surprisingly expensive – venture.
Companies like TurboTax like to tout their “free” filing options, but these programs are rarely actually free. If you have ever tried to file online using such software, you know that they charge extra fees for submitting multiple W-2s or 1099s, filing state returns, itemizing deductions, and more.
Worse, these companies deliberately use techniques called “dark patterns” to trick customers into purchasing unnecessary add-ons.
These programs also do not truly seek out deductions or look for ways to save you money. Only a trained tax professional will take the time to make sure your return is correct and free of errors.
Alyssa whatley tax attorney
Helping Atlantans Navigate Tax Laws
If you live in Atlanta and are facing difficulties with the IRS or Georgia Department of Revenue, The Law Office of Alyssa Whatley can help. We represent clients facing audits, who need relief from their tax burdens, and more.
You do not have to struggle with your finances alone. Contact The Law Office of Alyssa Whatley at 404-551-5838 to schedule your personal consultation right now.
Alyssa Maloof Whaltey
My goal is to make the tax resolution process as easy and stress free as possible so you can get back to focusing on the things that bring you joy.
