And many of the changes and upheavals from last year have caused changes to your tax returns this year. Due to the Covid crisis, there are plenty of new and revised provisions and important dates you will need to know about before filing your 2020 taxes this year. Here are some of the most important ones.
Yes, that’s later than normal.
Typically tax filing season opens in the second half of January. But the IRS needed more time to program and test its systems to insure they were ready for this year’s tax season since the agency was very busy at the end of 2020 getting out the second round of economic relief payments to Americans.
When are taxes due?
Despite the later than usual start date for filing season, you must file and pay any remaining federal income taxes you owe for 2020 by the traditional due date of April 15, unless you file for an extension (see next question).
That way you will avoid being hit with any potential late filing or late payment penalties.
Can I file for an extension?
But note that an extension to file is not an extension to pay what you owe. You still must pay any remaining federal taxes owed on your 2020 income by April 15, if you want to avoid a potential late payment penalty.
And if you’re owed a refund, taking longer to file your taxes means you will wait longer to get your refund.
When can I expect my refund?
Typically refunds are issued within 21 days of the IRS receiving your return. But the agency notes the fastest way for you to receive yours is to file electronically and choose direct deposit.
Are my stimulus payments taxable?
No. The money is tax-free.
That credit will reduce your income tax liability dollar-for-dollar. And to the extent the credit exceeds your tax liability, you’ll get the remainder as a refund.
Are my unemployment benefits taxable?
If you didn’t opt to have any income tax withheld from your unemployment payments during the year, the full tax bite will be assessed when you file your return.
But if your 2020 income was very low because you didn’t work for a big chunk of last year, it’s unlikely you will have to cut a check to the tax man. Instead you will see your refund reduced by the amount of income taxes you owe on your jobless benefits.