On March 17, the IRS announced that the federal income tax filing deadline for individuals will be automatically extended from April 15, 2021 to May 17, 2021. However, if you will be receiving a refund, you are encouraged to file before that date so that you can receive your tax refund as soon as possible.

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.

Individual taxpayers do not need to file any forms or call the IRS to qualify for this automatic federal tax filing and payment relief. Individual taxpayers who need additional time to file beyond the May 17 deadline can request a filing extension until Oct. 15. Requesting an extension gives you until October 15 to file your 2020 tax return but it does not grant an extension of time to pay taxes due, so be sure to pay any federal income tax due by May 17, 2021, to avoid interest and penalties.

Finally, please note that this extended deadline does not apply to estimated tax payments that are due on April 15, 2021. These payments are still due on April 15.

On March 11, President Biden signed into law the American Rescue Plan, which aims to provide additional relief to Americans that are struggling due to the ongoing COVID-19 pandemic. As part of this relief, up to $10,200 in unemployment compensation that you received in 2020 may now be tax free.

To qualify for this relief, you must have received unemployment compensation in 2020, and have a modified adjusted gross income (AGI) less than $150,000. If you are married, each spouse receiving unemployment compensation can exclude unemployment compensation of up to $10,200. Amounts over $10,200 for each individual are still taxable. If your modified AGI is $150,000 or more, you can’t exclude any unemployment compensation. If you file Form 1040-NR, you can’t exclude any unemployment compensation for your spouse.

Because this change was made after the IRS began accepting 2020 tax returns, it is possible that you have already filed your 2020 return. If you are one of the many people who discovered that you are eligible to exclude unemployment compensation after filing your 2020 tax return, the IRS asks that you not file an amended tax return. Instead, the IRS has announced that it will automatically refund money to people who filed their tax return reporting unemployment compensation before the recent changes made by the American Rescue Plan. These automatic refunds are expected to sent over this spring and summer.

This is a developing story, and details may have changed after this story was published. If you have questions about the American Rescue Plan and how it might affect your tax return, please contact our office.