The IRS announced that tax season will start on Friday, February 12th, 2021. This is the date when the IRS will start accepting and processing returns for the 2020 tax season.
Typically, tax season kicks-off in January. However, the IRS needs additional time to prepare for the 2020 tax season due to the changes that took place last year.
Recovery Rebate Credit
If you didn’t receive a stimulus check, you may have a surprise coming your way when you file your tax return. The government will issue a Recovery Rebate Credit for the 2020 tax season.
Individuals who did not qualify for a stimulus payment because their 2018 or 2019 numbers were much higher than their 2020 AGI will get the tax credit in 2020. This will impact many individuals who may have lost a job or filed for unemployment in 2020.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act that was passed on March 27th, 2020 lays out all the details for the first round of recovery rebate payments. The Covid relief act in December provides information regarding the second round of payments that were issued.
For individuals who already received a stimulus payment, that money will be treated as an advance refund of a 2020 tax credit. Fortunately, the recovery rebate payments are not considered income. Therefore, the payments are not taxable. That’s why individuals who did not receive funds last year will qualify for this refundable tax credit.
IRS Free File is available now and can help you determine your eligibility.
On Friday, January 15th, the IRS Free File tax software opened. Through this collaboration with reputable tax partners, you can save money on filing your tax return. If you earned $72,000 or less in 2020, you may be eligible for IRS Free File. You can file your tax returns now but your information won’t be sent to the IRS until February 12th.
The deadline for filing tax returns is still April 15, 2021. If you owe the IRS money and don’t file on time, you will have to pay a late penalty.
If you already know that you won’t be able to meet the tax filing deadline, you can request an extension. You will have until October 15th to file your tax returns.