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With the 2021 Winter Storm and American Rescue Plan (ARP), there are moving parts to tax return deadlines, stimulus payments, Unemployment compensation, and more changes that need your attention.

Additionally, the ARP added tax provisions to your 2020 tax return.  That is right, a law that passed Congress and signed into law on March 11, 2021, has tax rules for your 2020 tax return.

TAX DEADLINES

If you live in Texas or Oklahoma, your deadline is June 15, 2021, for ALL tax returns and your First and Second quarter estimated tax payments.

The remainder of the United States has a May 15, 2021 deadline to file their 2020 income tax returns; however, if you pay estimated taxes, your first quarter estimated taxes are due April 15, 2021.

STIMULUS CHECKS

Want a stimulus check?  Then make sure that your 2020 tax return filing does not eliminate you from getting a stimulus check.  Confused, of course, this is a job for the professionals, even they are as chaotic as you are about who gets a stimulus payment and the parameters impact when you should file.

Your Eligibility for a Stimulus Check is on EITHER your 2019 or 2020 Tax Return

Full payout eligibility (i.e., NOT phased-out) AGI limits are:

  • Single filers with income below $75,000
  • Head of Household filers with income below $112,500
  • Married-Joint filers with income below $150,000

Phaseouts

Phaseout is now a near-cliff structure that applies to all

taxpayers, regardless of how many dependents

New AGI phaseout ranges:

  • Single filers: $75,000 – $80,000
  • Head of Household filers: $112,500 -$120,000
  • Married-Joint filers with income below $150,000 – $160,000

Recovery Rebates – IRS Checkpoint #1

  • 2019 and/or 2020 Tax Return has been filed
  • Income was equal to or less than the AGI phase-out range
  • The taxpayer receives full recovery rebate check via direct deposit, check or debit card
  • STOP: If you meet all these requirements, Checkpoint #2 and #3 are Meaningless

Recovery Rebates – IRS Checkpoint #2

  • Additional Payment Determination Date:
  • For taxpayers who have NOT filed their 2020 tax returns yet
  • AGI might be significantly less in 2020 compared to 2019
  • Can have Recovery Rebate amount recalculated based on newly reported 2020 AGI
  • If 2020 AGI ends up less than 2019, IRS will send an additional check to ‘true-up’ the difference
  • Additional Payment Determination Dates are:
  • 90 days after the 2020 calendar year filing deadline

Recovery Rebates – IRS Checkpoint #3

 Recovery Rebate is a 2021 tax credit

  • If 2021 AGI is lower than 2019 and/or 2020 AGI (and below the phaseout), a Recovery Rebate credit will be applied on the 2021 tax return

If you receive a Recovery Rebate, it is never counted as income, and you do not have to pay it back if your later tax filing makes you ineligible.

Planning Tips

#1 – Delay filing the 2020 tax return if 2019 income was lower….and collect recovery rebate check.

#2 – Lower income in 2020 compared to 2019, use ‘Additional Payment Determination Date’ to collect recovery rebate

Check to see when you are scheduled to get the 2021 Economic Impact

Unemployment Compensation

$10,200/person of unemployment compensation received in 2020 will be tax-free

  • AGI must be under $150,000 for ALL filing status.’
  • Cliff threshold
  • Superseded return vs. Amended Return

If you have filed and reported all of the unemployment compensation as income, you will need to file a superseded return.

Friday, March 19, 2021 update – now the IRS says on Twitter

@IRSNEWS #IRS strongly urges taxpayers to not file amended returns related to the new legislative provisions in the American Rescue Plan Act until the agency issues additional guidance.

Let the Professional handle this!

If you have questions about these tax items or any other new tax law, reach out to us and guide you through the maze of new and old tax laws.

Got something on your mind or have a question?

All of this can occur even at a distance.

Call us at214-239-4700 or click to set up a ZOOM MEETING

Michael Tannery CPA CDFA® AIF® ● CEO
Registered Principal | Tannery & Company

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 The opinions expressed in this material are for general informational purposes only and is not a substitute for professional advice.  Individual circumstances do vary.