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AARP Answers: Your Tax Return and the Coronavirus

The latest on filing extensions, tax refunds, deductions and more

Tax form with a United States Treasury check I R S tax Form 1040 and W 2 and a calculator on top of the forms

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Do I need to file a 2020 tax return to receive a stimulus check?

Not necessarily. If the IRS does not have a 2020 tax return, it will base your eligibility for the third stimulus check on your 2019 tax return.

Those who have not gotten their earlier stimulus payment and are eligible will have to file a 2020 income tax return to get a Recovery Rebate Credit. Unlike a tax deduction, which reduces your taxable income (and therefore your tax payment), a tax credit reduces the amount of tax you owe, dollar for dollar. Even better, and unlike most credits, the Recovery Rebate Credit will give you money back even if it's more than the tax you owe or paid. For example, if you owe $700 in federal income taxes for 2020, a $1,200 stimulus tax credit would net you a $500 tax refund.

You need to file federal tax form 1040 or 1040-SR for 2020 to claim your Recovery Rebate Credit. You'll also need your IRS Notice 1444, the letter the IRS should have sent to you a few days after you got your first stimulus check, and IRS Notice 1444-B, which you would have gotten after your second stimulus check. If you didn't get a stimulus check, you don't need either notice.

Would my stimulus check payment be considered taxable income?

No.

Will my tax refund be delayed by the coronavirus?

The Internal Revenue Service is open and processing mail, tax returns, payments, refunds and correspondence. However, COVID-19 continues to cause delays in some services, including processing paper returns. If you file a complete and accurate paper tax return, your refund should be issued in about six to eight weeks from the date the IRS receives your return. If you file your return electronically, your refund should be issued in less than three weeks, even faster when you choose direct deposit. The average refund was $2,741 in 2020.

You can track the progress of your refund with the Where's My Refund? tool operated by the IRS. You'll need your Social Security number, tax status and exact amount of your refund to use the tool.

Has the outbreak affected the deadlines for filing and paying 2020 federal income taxes?

Yes. In 2020, the IRS moved the tax filing deadline to July 15 from April 15. In 2021, however, the deadline is May 17. If you owe taxes and miss the deadline, the IRS will charge you both interest and penalties.

If you think you can’t make the May 17 filing deadline, you can get an automatic extension to Oct. 15 by filing IRS Form 4868. If you do file form 4868, you’ll still have to pay taxes due by May 17.

Is my state income tax deadline the same as it was before the pandemic?

Possibly. The IRS announcement applies only to federal tax returns. Forty-two states and the District of Columbia levy income taxes, and the due date varies from state to state. Check with your state’s tax department to confirm your filing deadline.

Can I still file my taxes for free?

About 70 percent of taxpayers are eligible to file federal tax returns online through IRS Free File, which connects single filers and families with annual income of $72,000 or less to free filing software from select partners like H&R Block, TaxAct and TurboTax. To browse options and confirm your eligibility, visit the Free File page on IRS.gov.

The IRS tightened standards on Free File providers in 2020 to make it easier to find Free File options and to protect filers from unnecessary fees. Keep in mind, though, that there may be additional fees to file state tax returns, as well as to file returns if your income exceeds $72,000. But the Free File providers are required to disclose this prominently.

Should I file now or wait until May 17?

You should file as soon as possible if you’re getting a refund. But if you know your income was lower in 2019 than in 2020, it might make sense to wait until closer to May 17 to file your taxes. That way, you might be able to get a stimulus check. If you have to pay, there’s no reason to hurry, unless you worry that you’d spend your payment frivolously. If you owe taxes, don’t miss the May 17 deadline or you could face penalties and interest.

When is the deadline for making 2020 contributions to an IRA?

You now have until May 17th to make an individual retirement (IRA) contribution for 2020. The deadline to contribute to health savings accounts (HSAs), Archer Medical Savings Accounts (Archer MSAs), and Coverdell education savings accounts (Coverdell ESAs) is also May 17th

Will I be hit with a tax penalty for making an early withdrawal from my retirement account?

The coronavirus relief bill called the CARES Act, waived the 10 percent penalty for early withdrawals from retirement accounts for workers facing difficulties due to the coronavirus pandemic in 2020. That provision doesn’t apply in 2021. Those 2020 withdrawals are still taxable, but over three years — and you can add back the withdrawn retirement funds for three years, thereby escaping the additional tax. Those returned contributions don't affect retirement account contribution caps.

I'd like to donate money to the local food bank. Any chance I can deduct it?

Charitable giving is always theoretically deductible, as long as your itemized deductions including donations to charity add up to more than the standard deduction — $12,400 for individuals and $24,800 for married couples filing jointly for the 2020 tax year. What changed was a provision in the CARES Act that allowed taxpayers who don't itemize to deduct up to $300 in cash donations to charity. (Those who file jointly only get $300, not $600). The so-called above-the-line deduction would be on top of the standard deduction on your 2020 tax return. For the 2021 tax year, the $300 charitable deduction has been expanded to a per-person basis, so couples filing jointly can deduct $300 apiece.

When are my estimated taxes due?

There are four due dates for estimated tax payments: April 15, June 15, Sept. 15, and Jan. 15 of the following year. Since Jan. 15, 2022 falls on a Saturday and Monday is a holiday, the final estimated tax payment for 2021 is due on Jan. 18, 2022.

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