2020 Tax Season update
February 2, 2023
IRS AND FRANCHISE TAX BOARD TO EXTEND FILING SEASON
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The Internal Revenue Service and the Franchise Tax Board have announced that the federal and state income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021.
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Individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without penalties and interest, regardless of the amount owed. This postponement applies to individual taxpayers, including individuals who pay self-employment tax. Penalties, interest, and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. Individual taxpayers will automatically avoid interest and penalties on the taxes paid by May 17.
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You do not need to file any forms or call the IRS to qualify for this automatic federal tax filing and payment relief. If you need additional time to file beyond the May 17 deadline you can call our office to request a filing extension until Oct. 15. We will file a Form 4868, which will give you until October 15 to file your 2020 tax return but does not grant an extension of time to pay taxes due. Taxpayers should pay their federal income tax due by May 17, 2021, to avoid interest and penalties.
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The IRS urges taxpayers who are due a refund to file as soon as possible. Most tax refunds associated with e-filed returns are issued within 21 days.
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This relief does not apply to quarterly 2021 estimated tax payments that are due on April 15, 2021. These payments are still due on April 15.
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NEW EXCLUSION OF UP TO $10,200 UNEMPLOYMENT COMPENSATION
If your modified adjusted gross income (AGI) is less than $150,000, The American Rescue Plan Act of 2021 excludes from income up to $10,200 of unemployment compensation paid in 2020, which means you don’t have to pay tax on unemployment compensation of up to $10,200. If you are married, each spouse receiving unemployment compensation doesn’t have to pay tax on unemployment compensation of up to $10,200. Amounts over $10,200 for each individual are still taxable.
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We are holding all 2020 returns that have unemployment benefits until we receive our software updates.
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For returns that have been filed with these items, we advise that you hold off on filing amended returns until the IRS provides official guidance. As soon as we receive information on how to proceed, we will contact you.
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NOTE: Please verify the amount of employment benefits received on your 1099-G. Scammers took advantage of the pandemic by filing fraudulent claims for unemployment compensation using stolen personal information. If you receive an incorrect Form 1099-G for unemployment benefits you did not receive you should contact the EDD to request a revised Form 1099-G showing you did not receive these benefits.
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Please contact our office if you have any questions.
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Best wishes
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Phil, Nett, Leslie, Erin, Sarah