Adrian, MI: 4196 West Maple Ave | Jackson, MI: 2530 Spring Arbor Road

Adrian, MI: (517) 263-5788 | Jackson, MI: (517) 787-1400 adrian@gpgrcpa.com

2020 Tax Filing Update

Federal income tax filing due date for individuals extended to May 17, 2021

The IRS issued IR-2021-59 which indicates the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. Individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without penalties and interest, regardless of the amount owed. This postponement applies to individual taxpayers, including individuals who pay self-employment tax. Penalties, interest and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. Individual taxpayers will automatically avoid interest and penalties on the taxes paid by May 17, 2021.

Individual taxpayers do not need to file any forms or call the IRS to qualify for this automatic federal tax filing and payment relief. Individual taxpayers who need additional time to file beyond the May 17,  2021 deadline can request a filing extension until October 15, 2021 by filing Form 4868. Filing Form 4868 gives taxpayers until October 15, 2021 to file their 2020 tax return but does not grant an extension of time to pay taxes due. Taxpayers should pay their federal income tax due by May 17, 2021, to avoid interest and penalties.

 

This relief does not apply to estimated tax payments that are due on April 15, 2021. These payments are still due on April 15, 2021.

 

American Rescue Plan Act (H.R. 1319)

President Biden signed into law the American Rescue Plan Act (ARPA), H.R. 1319. A few highlights of the $1.9 trillion Act include an exclusion of up to $10,200 of unemployment benefits received for taxpayers making less than $150,000; a third economic impact payment that is an advance of 2021 tax credit; changes to the child tax credit, earned income credit and dependent care credit.

The IRS announced that they are reviewing implementation plans for the newly enacted American Rescue Plan Act of 2021. Additional information about a new round of Economic Impact Payments, the  expanded Child Tax Credit, including advance payments of the Child Tax Credit, and other tax provisions will be made available as soon as possible on IRS.gov. The IRS strongly urges taxpayers to not file amended returns related to the new legislative provisions or take other unnecessary steps at this time.

The IRS will provide taxpayers with additional guidance on those provisions that could affect their 2020 tax return, including the retroactive provision that makes the first $10,200 of 2020 unemployment benefits nontaxable. 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. For those who received unemployment benefits last year and have already filed their 2020 tax return, the IRS emphasizes they should not file an amended return at this time, until the IRS issues additional guidance.