Three Things You Should Know This Tax Day

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Photo courtesy of Real Simple.

Few combinations are as stressful as a Monday and filing taxes. But don’t worry, this Tax Day Monday, we’ve got you covered.

The COVID-19 pandemic has not only postponed filing taxes an entire month but has also prompted new provisions and date changes that you should be aware of.

As explained by CNN, while the original filing and payment date was April 15, the IRS has pushed the deadline to May 17 to give individual filers, tax preparers, and the IRS itself more time to sort through the many changes affecting one’s 2020 taxes since the last COVID relief package. 

In fact, the filing season started a few weeks late this year as the IRS was busy administering provisions, such as stimulus checks.

What are the time-lapses?

Unless you decide to request an extension, you must file and pay any federal income tax due for 2020 by May 17. This way, you will avoid any potential late filing or late payment penalties.

For state taxes, and although the IRS extended the federal filing deadline, each state can set its own tax filing deadlines.

The only states where the filing dates differ are Hawaii (April 20), Iowa (June 1), Maryland (July 15), and Oklahoma (June 15).

However, you can request an automatic five-month extension of time to file your federal income tax return, which would mean it would not be due until October 15. To do so, you must file your request with the IRS by May 17.

Refunds may take some time

Although refunds are issued within 21 calendar days of the IRS receiving your return, this year, there is a huge backlog of returns to process from both 2019 and 2020.

As CNN continues, as of April 22, there were more than 29 million returns held for annual processing, so any refunds from that batch are likely to be delayed.

Stimulus checks and unexpected perks

The famous stimulus payments that some Americans received during the pandemic are tax-free. But for those who did not receive the first two rounds of payments, there is good news.

Those whose 2019 income was higher than their 2020 income or people who did not file tax returns for 2019 or 2018 will be able to receive the money they are owed through their federal tax return as long as they apply for the refundable Recovery Refund Credit.

That credit will reduce their income tax liability dollar-for-dollar. And to the extent the credit exceeds your tax liability, you will receive the remainder as a refund.

According to the IRS, more than 2 million people have already received a new stimulus payment when filing a 2020 return.