The Internal Revenue Service will again give Americans extra time to file their taxes due to the pandemic, according to Democrats on the House Ways and Means Committee.
Instead of the usual April 15, applicants have until May 17, representatives Richard Neal of Massachusetts, chairman of Ways and Means, and Bill Pascrell Jr. of New Jersey said on Wednesday. The extra time is meant to take the strain off filers grappling with the economic upheaval caused by the coronavirus that has left millions of people unemployed or reduced their working hours.
The one month delay isn’t as much extra time as the IRS offered last year when the filing deadline was moved to July 15th. However, it should make it easier for taxpayers to get their finances under control, including understanding the changes that only needed to take effect earlier this month with the signing of the US rescue plan.
The new law made the first $ 10,200 in unemployment benefits received in 2020 tax-free for people with incomes less than $ 150,000. This was a significant change for many whose jobs were affected by the pandemic. The IRS said last week it would provide a worksheet for paper filing and coordinate with tax software companies. The agency also urged those eligible for the tax break who had already filed their 2020 statement not to submit an amended statement until it issued additional guidance.
According to the IRS, nearly 49 million tax returns had been processed by March 5, the 22nd day of the filing season, which started later than usual. Last year, 65 million returns had been processed by March 6, but that was 40 days into the registration season, and by July 17, a total of about 150 million returns had been processed a day or two after the registration deadline.
“This expansion is absolutely necessary to give Americans the flexibility they need in a time of unprecedented crisis,” Pascrell and Neal said in a statement. “Under titanic stress and strain, American taxpayers and tax advisors need more time to file tax returns. And the IRS itself started the filing season late, is still behind schedule, and must now implement changes to the American bailout plan. “
Charles Rettig, the IRS commissioner, is set to testify Thursday about the 2021 filing season before a supervisory subcommittee chaired by Mr. Pascrell.
Finance officials did not immediately respond to requests for comment on Wednesday afternoon. The Internal Revenue Service declined to comment.
White House press secretary Jen Psaki said she did not think the delay was “yet” completed, but said the administration “would like to speak to her” once it has been confirmed.
The delay was previously reported by Bloomberg News. A congressional assistant familiar with the plan initially told the New York Times that the deadline would be postponed to May 15. That day is a Saturday and the tax day is usually moved to the following Monday.
How has the pandemic changed your taxes?
Are business stimulus payments taxed?
No The so-called economic impact payments are not treated as income. In fact, it’s technically an advance on a tax credit known as a Recovery Rebate Credit. The payments could indirectly affect state income tax payments in a handful of states where federal tax is deductible from taxable state income, as our colleague Ann Carrns wrote. Continue reading.
Are my unemployment benefits taxable?
Most of time. Unemployment insurance is usually subject to both federal and state income tax, although there are exceptions (nine states do not levy their own income taxes, another six are exempt from taxation according to the tax foundation). However, they do not owe so-called wage taxes, which are paid for Social Security and Medicare. With the new relief bill, the first $ 10,200 in benefits will be tax-free if your income is less than $ 150,000. This applies to 2020 only. (If you’ve already filed your taxes, see IRS guidelines.) Unlike employer’s paychecks, unemployment taxes aren’t automatically withheld. Recipients have to register – and even if they do, federal taxes are only withheld at a flat rate of 10 percent of the benefits. While the new tax break will provide a cushion, some people might still owe money to the IRS or certain states. Continue reading.
I worked from home this year. Can I make the home office deduction?
Probably not, unless you are self-employed, an independent contractor, or a gig worker. The revision of the tax law at the end of 2019 removed the home office allowance for employees from 2018 to 2025. “Employees who receive a paycheck or W-2 solely from one employer are not entitled to the allowance, even if they are currently working from home. Said the IRS. Continue reading.
How does the family leave the credit work?
The self-employed can take paid foster leave if their child’s school is closed or their usual childcare provider is unavailable because of the outbreak. This works similarly to the smaller sick pay – 67 percent of average daily earnings (for either 2020 or 2019), up to $ 200 a day. However, the care leave can last 50 days. Continue reading.
Have the rules for donating to charity changed?
Yes. This year, you can deduct up to $ 300 for charitable donations even using the standard deduction. Previously, only those who made a breakdown could claim these deductions. Donations must be made in cash (such as checks, credit cards, or debit cards) and must not contain any securities, household items, or other property. For 2021, the withdrawal limit for joint applicants will double to $ 600. Itemizer rules have also become more generous. The charity donation limit has been removed so individuals can contribute up to 100 percent of their 60 percent gross adjusted income. However, these donations must go to charitable organizations in cash. The old rules apply, for example, to contributions to funds advised by donors. Both provisions are available until 2021. Read more.
The delay, earlier reported by Bloomberg News, could also give people more time to contribute to an individual retirement or health savings account. During last year’s filing renewal, the IRS reminded taxpayers that they can contribute until the due date for the tax year tax return.
This means that taxpayers would have a little more time to find money to contribute to a tax-privileged account that can reduce their income for 2020. This could potentially make them eligible for stimulus money if they are otherwise slightly above the income thresholds.
The pressure to extend the deadline had increased. The American Institute of Certified Public Accountants said Tuesday that the pandemic had created “immeasurable trouble” that had made it difficult for taxpayers and practitioners to meet the April 15 deadline.
And lawmakers on both sides had asked the Internal Revenue Service to postpone tax day, finding complicated tax changes in the recently passed economic aid package.
Tara Siegel Bernard and Ron Lieber contributed to the coverage.
Comments are closed.