News

The IRS has finally responded to pleas from members of Congress and tax professional organizations and extended the regular tax filing deadline for 2020 individual income tax returns to May 17, 2021.

The extension will cover both the filing of an individual 2020 tax return and any 2020 tax due.

https://www.irs.gov/newsroom/tax-day-for-individuals-extended-to-may-17-treasury-irs-extend-filing-and-payment-deadline

The extension does not apply to other tax returns or payments normally due on April 15th - for example the first quarter 2021 estimated tax payments are still due on April 15th.

The IRS has announced that further guidance will be provided regarding all the tax deadlines and procedures impacted by the filing extension.

Chet Burgess, EA, NTPI Fellow

The IRS has almost 7 million 2020 tax returns with refunds due in a queue for manual processing, which will take several weeks.  So the taxpayers are having to wait for their money.

Details in this article from The Washington Post: 

https://apple.news/AgeMMDkIjTvi_NiBlpcE1hQ

Taxpayers who has significantly lower income in 2020 than in 2019 may want to file their 2020 tax returns as soon as possible if the 2020 return could result in a larger stimulus payment this year.

USA Today has a good overview of the issues:

https://www.usatoday.com/story/money/taxes/2021/02/23/tax-return-stimulus-check-file-early-dependents/4552270001/

IRS tips on how to avoid unscrupulous "ghost" tax preparers:

https://www.irs.gov/newsroom/beware-of-ghost-preparers-who-dont-sign-tax-returns

The IRS is strongly recommending that taxpayers file their 2020 returns electronically and request direct deposit of refunds for the quickest turnaround.  The IRS is still backlogged with millions of 2019 paper tax returns.

https://apple.news/AV_X5D9qjTl-zHsQk6nSgYA

The IRS has announced it will begin accepting e-filed returns on February 12th:

https://www.irs.gov/newsroom/2021-tax-filing-season-begins-feb-12-irs-outlines-steps-to-speed-refunds-during-pandemic

There is considerable disagreement among the state taxing agencies at this point regarding how income of work-from-home telecommuters will be taxed by the state of taxpayer residence or the state where the employer is located.  Some states are beginning to take other states to court over the issue.

States Square Off Over Taxing Remote Workers’ Income

The IRS and Treasury have indicated that businesses that receive PPP loan forgiveness would NOT be allowed to deduct business expenses paid with the forgiven loan.

However, it appears the new relief bill includes language to allow deduction of those business expenses:

PPP Borrowers Stand to Gain Tax Deductions

The IRS has advised taxpayers to prepare for new sections on their 2020 tax returns, such as reconciliation of the EIP "stimulus payment."

Details at: https://www.irs.gov/newsroom/get-ready-for-taxes-whats-new-and-what-to-consider-when-filing-in-2021

The IRS recently posted an article on its program to target high-income non-filers:

https://www.irs.gov/about-irs/how-the-irs-prioritizes-compliance-work-on-high-income-non-filers-through-national-and-international-efforts