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, more than 156 million payments have been sent to Americans in the third round.
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The IRS is sending stimulus checks on a weekly basis now. Some Americans are eligible for "plus-up" payments from the agency, which will correct any changes to money that they are owed based on their 2020 tax returns.
Many people are rushing to get their returns done so they can qualify for the latest stimulus aid, and they have questions like: Is it best to file now? Can I still file my return to qualify for a third stimulus check? When will I get a "plus-up" payment?
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:
When will 'plus-up' payments arrive?
The fourth batch of payments made under President Joe Biden’s American Rescue Plan included more than 1 million “plus-up” payments worth more than $2 billion for people who were eligible for additional money now that their 2020 tax returns have been processed, the IRS said Wednesday.
In some cases, a person could be eligible for a new or bigger payment based on their recently processed tax returns. These ongoing supplemental payments would apply to those who had already received stimulus money earlier in March, but the initial payment was based on a 2019 tax return, not the 2020 return that had been recently filed.
The “plus-up” payments will continue on a weekly basis going forward, the IRS said, as the agency continues processing tax returns from 2020 and 2019. These are 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.
How will the IRS send 'plus-up' payments?
If you received your stimulus payment via direct deposit, that’s likely how you will get the “plus-up” money. If the IRS doesn't have your information, you may receive a paper check instead, tax experts say.
“If you haven’t filed your 2020 return yet, just get it in,” recommends Dina Pyron, global leader of EY TaxChat, a tax-prep service from Ernst & Young. “Once you file your 2020 return and you qualify for the $1,400 for you, your family and dependents, those payments will either be deposited directly in your bank account, or you will get an additional check.”
Who qualifies for a third stimulus check?
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?
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 Mark Steber, chief tax information officer at Jackson Hewitt.
Do I still have a shot at qualifying for a third check if I file now?
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.
Steber 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.”
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 last month during testimony on Capitol Hill.
Can I claim the Recovery Rebate Credit on my 2021 taxes if I never receive a third check?
Yes, if you are eligible for a third payment but never receive one you can claim the Recovery Rebate Credit on your 2021 returns next year, according to Tucker.
“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,” says Tucker.
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Do federal beneficiaries qualify for a check?
Yes. Following delays, the largest chunk of payments in the fourth batch made under President Joe Biden’s American Rescue Plan went to Social Security beneficiaries who didn’t file a 2020 or 2019 tax return and didn’t use the Non-Filers tool last year, the IRS said.
More than 19 million payments, totaling more than $26 billion, went to these beneficiaries, including Social Security retirement, survivor or disability beneficiaries, according to the agency.
More than 3 million payments, worth nearly $5 billion, went to Supplemental Security Income beneficiaries. And nearly 85,000 payments, worth more than $119 million, went to Railroad Retirement Board beneficiaries.
What about VA beneficiaries?
Payments for VA beneficiaries who didn’t file a 2020 or 2019 tax return and didn’t use the Non-Filers tool last year will be disbursed on April 14, the IRS said.
“If no additional issues arise, the IRS expects to begin processing these VA payment files at the end of this week,” the agency said. “Because the majority of these payments will be disbursed electronically, they would be received on the official payment date of April 14.”
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.
Do 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.
It’s important that taxpayers check their state to see if they are moving their deadline. At least 35 states have extended 2020 tax filing and payment deadlines to May 17, according to the American Institute of Certified Public Accountants.
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.
Are estimated tax payments still due April 15?
Yes. The IRS isn’t extending the deadline for first quarter estimated tax payments for self-employed individuals. Those payments are still due April 15. Taxes must be paid as taxpayers earn or receive income during the year, either through withholding or estimated tax payments.
Estimated tax payments are made quarterly to the IRS by people whose income isn't subject to income tax withholding, including self-employment income, interest, dividends, alimony or rental income. Most taxpayers automatically have their taxes withheld from their paychecks and submitted to the IRS by their employer.
Is the deadline for retirement and health contributions extended to May 17?
Yes. Taxpayers have until May 17 to contribute to their individual retirement accounts and health accounts, the IRS said.
This means that individuals have more time to make contributions to their individual retirement accounts for 2020, including IRAs and Roth IRAs, along with health savings accounts, Archer Medical Savings Accounts and Coverdell education savings accounts, the IRS said. Those deadlines would normally fall on April 15.
“That is a great tax break for people,” says Lisa Greene-Lewis, a CPA at TurboTax. “You can make a 2020 contribution and make an impact on your 2020 taxes.”
How do I check the status of my payment?
Get updates on the status of your next stimulus payment using the IRS "Get My Payment" tool. To use it, enter your full Social Security number or tax ID number, date of birth, street address and ZIP code.
But the Get My Payment tool won't be updated until this weekend with information for VA beneficiaries expecting payments next week, the agency said.
For those who are eligible, the tool will show a "Payment Status" of when the payment has been issued and the payment date for direct deposit or mail, according to the IRS's frequently asked questions.
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.
When will tax refunds start for the $10,200 unemployment tax break?
The IRS will begin refunding money to people in May who already filed their returns without claiming the new tax break on unemployment benefits, the agency said. The federal tax break went into effect following the recent changes made by the American Rescue Plan.
The legislation allows taxpayers who earned less than $150,000 in adjusted gross income to exclude unemployment compensation up to $20,400 if married filing jointly or $10,200 for all other eligible taxpayers. The legislation excludes only 2020 unemployment benefits from taxes.
What if I already filed my taxes?
For those taxpayers who already have filed and figured their tax based on the full amount of unemployment insurance, the IRS will determine the correct taxable amount of unemployment compensation and tax, according to the agency. Any resulting overpayment of tax will be either refunded or applied to other outstanding taxes owed, the IRS added.
For those who have already filed, the IRS will do these recalculations in two phases, starting with those taxpayers eligible for the up to $10,200 exclusion. The IRS will then adjust returns for those married filing jointly taxpayers who are eligible for the up to $20,400 exclusion and others with more complex returns.
What if I haven’t filed yet?
The IRS worked with the tax preparation software industry (including TurboTax and H&R Block) to reflect these updates so that those who file electronically need to respond to the related questions when preparing their returns, the agency said.
The IRS has stressed that taxpayers shouldn’t file an amended return unless the calculations make the taxpayer newly eligible for additional federal credits and deductions not already included on the original tax return.
“If you filed your return and you actually paid tax on the full amount, don’t amend your return,” says Pyron. “The IRS said they’re going to give that refund back to you.”
What about state taxes for jobless benefits?
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.
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.
“This credit is for tax year 2021,” says Greene-Lewis. “The IRS hasn’t issued full guidance yet, but they’re expected to start issuing advanced payments sometime in July so that people don’t have to wait until they file their 2021 returns.”
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