Question of the Week
More Tax News
Happy Friday all!
As if there weren’t already enough tax news these past couple of weeks, here is a couple of more things you should know.
The IRS Extends More Deadlines
On Monday, the Internal Revenue Service announced that individuals have until May 17, 2021 to meet certain deadlines that would normally fall on April 15, such as making IRA contributions and filing certain claims for refund. This follows a previous announcement from the IRS on March 17, that the federal income tax filing due date for individuals for the 2020 tax year was extended from April 15, 2021, to May 17, 2021.
The following deadlines have been extended:
- Time to make contributions to IRAs and health savings accounts extended to May 17: In extending the deadline to file Form 1040 series returns to May 17, the IRS is automatically postponing to the same date the time for individuals to make 2020 contributions to their individual retirement arrangements (IRAs and Roth IRAs), health savings accounts (HSAs), Archer Medical Savings Accounts (Archer MSAs), and Coverdell education savings accounts (Coverdell ESAs).
- 2017 unclaimed refunds: For tax year 2017 Federal income tax returns, the normal April 15 deadline to claim a refund has also been extended to May 17, 2021. The law provides a three-year window of opportunity to claim a refund. If taxpayers do not file a return within three years, the money becomes property of the U.S. Treasury.
As I emphasized last time, please note that this extension does not apply to estimated payments due April 15th. So make sure to get your 1st quarter payment ready for 4.15. See Notice 2021-21 for additional details.
The Paycheck Protection Program (PPP) also extended
In other extension news, on Tuesday President Biden signed the PPP Extension Act into law. That signature formally changed the deadline from March 31st to May 31st. This will give more time for you Schedule C filers to get additional money based on your gross income rather than net income. However, don’t wait too long, as some feel the funds may run out before the deadline.
IRS to recalculate taxes on unemployment benefits
Lastly, on Wednesday the IRS announced that it will take steps to automatically refund money this spring and summer to people who filed their tax return reporting unemployment compensation before the recent changes made by the American Rescue Plan. The legislation, signed on March 11, allows taxpayers who earned less than $150,000 in modified adjusted gross income to exclude unemployment compensation up to $20,400 if married filing jointly and $10,200 for all other eligible taxpayers. The legislation excludes only 2020 unemployment benefits from taxes.
Because the change occurred after some people filed their taxes, the IRS will take steps in the spring and summer to make the appropriate change to their return, which may result in a refund. The first refunds are expected to be made in May and will continue into the summer.
If this applies to you there is no need for you to file an amended return unless the calculations make the taxpayer newly eligible for additional federal credits and deductions not already included on the original tax return.
Quote of the Week
“All great changes are preceded by chaos.” – Deepak Chopra
Task of the Week
For you business owners, don’t forget the 1st quarter ended on Tuesday and it’s PROFIT DISTRIBUTION TIME! Take some time this weekend to figure out how you’re going to celebrate with your well-earned and well-allocated profit! I’d love to hear what you decide to do. You can contact me at the links below.