08 Apr Tax Day 2021: What You Need to Know
Ken Corbin of the IRS discussed the decision to delay tax day and other tax issues Friday during an Ethnic Media Services press briefing. (Screenshot captured by Danielle Parenteau-Decker / Richmond Pulse)
By Danielle Parenteau-Decker
Tax day is approaching, but not as soon as you might think.
The usual April 15 deadline is a perennial source of stress and confusion with forms, schedules, filing requirements, credits, deductions and other issues. But this year, the Internal Revenue Service has pushed the cutoff back a month.
Individuals now have until May 17 to file federal returns and pay taxes — if they owe the government money. Why? The pandemic, of course.
“Our focus as the pandemic continues is to help taxpayers and help tax industry in a way that ensures the safety of our employees and the taxpayers and communities we serve,” said Ken Corbin, commissioner of the IRS’s wage and investment division. “That’s one reason why we extended the due date for individuals to May 17, 2021.”
While states were not required to follow the IRS change, California pushed its deadline to May 17 also.
The federal extension also applies to contributions made to individual retirement accounts, Roth IRAs, Archer and other health savings accounts as well as Coverdell education savings accounts, Corbin said. People who are self-employed and make estimated tax payments would still need to make their first-quarter payments by April 15, however.
The move gives people more time to figure out what the economic changes brought by the pandemic mean for their taxes.
Corbin and Sue Simon, who also works in the wage and investment division, talked about a number of tax issues during a press briefing hosted Friday by Ethnic Media Services.
Filing taxes is always complicated, but there are some things unique to this tax season to be aware of.
First, the economic impact payments, more commonly known as stimulus checks. If you received the full amount in the first two rounds, you do not need to worry about that money when filing your taxes. It is not taxable. If you were eligible but did not get all or part of the money, you can claim the Recovery Rebate Credit.
To do so, you will need to file a 2020 tax return, even if you are not otherwise required to file.
“We had a lot of individuals eligible for the Recovery Rebate Credit who may not file normally,” said Corbin.
How to file taxes for free
He added that people such as those on Social Security or whose income is below filing requirements may file a simple tax return. If you are not required to file taxes, you would not owe the government any money, nor would you have to pay to file.
Most online services will not charge to file a simple return. But you might not have to pay even if your tax requirements are a bit more complicated. All filers can find no-cost options on the IRS Free File page.
Taxpayers whose adjusted gross income is $72,000 or less can choose from a number of online services and file with them directly after using the Free File tool. If your AGI is above $72,000, you can get free forms, but you will have to file them yourself.
If, like millions of people in the U.S., you lost your job last year, you can get a tax break on your unemployment earnings. For tax year 2020, up to $20,400 if married and filing jointly and up to $10,200 for all other statuses is not taxable, said Corbin.
When you file your taxes, there are a few things you can do to help the process along.
Most important, make sure you have all your documents. People who worked last year would get a W2 as an employee or a 1099 as an independent contractor. You could also receive tax forms related to unemployment, health coverage, student loans, banking and more. Some of those forms were likely mailed, while some could be available electronically.
Once you’ve got your paperwork together, you should e-file with direct deposit, said Corbin.
“It is the fastest way for your return to be processed and if you get a refund, to receive it,” he said.
“E-filing is critical for us,” Simon agreed. “It’s the best way to file.”
She said people can see their refunds in their bank accounts within 21 days if they file electronically. Otherwise, it can take twice as long — at least.
“It takes about six weeks in a normal time period for us to process a paper return,” she said.
But this is not a normal time.
“You may have noticed there’s a little bit going on out there with COVID,” Simon said. “It has delayed our processing. We’re still working on some of our backlog.”
Economic Relief for Parents
Parents might wonder about the child tax credit.
Under the American Rescue Plan, the economic stimulus bill that President Joe Biden recently signed into law, the child tax credit will go up. It’s set to increase to $3,000 for children aged 6-17 and $3,600 for children under 6. The credit is officially for tax year 2021 — meaning next year’s returns — but you might not have to wait that long to see any of the funds.
The IRS will automatically consider people who filed taxes in 2019 or 2020 and claimed a child as a dependent to be eligible for the credit. And there will be a way to add children as needed. Corbin said parents could get an advance on the credit beginning this summer.
Get tax help online
If you have questions while completing your taxes, there’s a good chance you’ll find the answer on the agency’s website. Corbin and Simon both repeatedly urged people to visit IRS.gov. There, you can find both general and personalized information.
Simon said the website is intuitive, accessible and full of online resources to make filing taxes easier.
“Always go there first,” she said.
But you’ll want to make sure you’re in the right place. The web address, again, is simply IRS.gov.
“If it says irs.com or irs.edu or irs.gov, then 5 million characters after it, then that’s not where you want to be,” Simon said.
She also warned about other tax-related scams.
If you get a phone call from someone who says they are from the IRS, you owe money and they’ll send the police after you if you don’t pay right now — you might even hear sirens in the background — it’s fake.
“We don’t do that,” Simon said.
If you get a call like that, just hang up. Don’t say anything at all because it could be recorded and used in a different context.
The IRS will always send you bills in the mail, she said, not telephone or send an email.
“We’re not going to call and say you made a mistake and owe and need to verify personal info,” she said. Nor will the agency call and offer to help you set up a payment plan. But it will work with people on alternative payments if you ask.
Scammers also target students by sending phishing emails with the IRS logo to .edu email addresses. It’s best to avoid clicking links in emails unless you are absolutely certain both the sender and the destination are safe.
In the most common scam, people file fake returns in someone’s name but with different bank account information. They can do so if they get ahold of anyone’s Social Security number — even a child’s. The IRS has more details about identity theft online.
Get tax help in your community
If you don’t have internet access or aren’t comfortable doing this stuff online, assistance is available offline too.
The Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs offer free tax return preparation in communities.
The IRS also offers recommendations for how to pick a paid preparer, but Simon said to “stay away from” companies that promise to get you a bigger refund.
“I cringe” at those ads, she said, adding that the claims are untrue.
“There is no bigger refund,” she continued. “If your return is filed correctly, you will get the refund that is correct.”
To get help with your taxes, the one thing you probably shouldn’t do is call the IRS. Simon said the agency got about 1,500 calls per second at one point this tax season.
The IRS also offers basic tax information in the following foreign languages: Spanish, simplified and traditional Chinese, Vietnamese, Korean, Russian, Arabic, Haitian Creole, Tagalog, Portuguese, Polish, Farsi, French, Japanese, Gujarati, Punjabi, Khmer, Urdu, Bengali and Italian.
People who are low-income, disabled, limited English speakers or 60 and up can get free help with their taxes. Locally, assistance is available at Lao Family Community Development, 1865 Rumrill Blvd., Suite B, San Pablo, CA 94806.