What to expect when tax season kicks off Feb. 12
WASHINGTON » Tax season can be frustrating and tedious even in the best of times.
This year, you can bet on it being even worse.
Because of the pandemic, many people will be forced to meet virtually with their tax experts to calculate the numbers. Meanwhile, IRS backlogs mean millions of filers could start work on their 2020 federal return before the agency has processed their return from 2019. And those who qualified for stimulus relief because of the collapse of the economy will have to wonder how that affects their taxes, as well.
As you prepare your tax paperwork, here are some things to expect.
Tax deadline: The IRS says it expects more than 150 million tax returns to be filed this year. Although the start of the tax season was delayed until Feb. 12, so far there is no indication that the April 15 deadline will be extended as it was last year.
Stimulus payments: Many people who received economicimpact payments fear that this will mean more taxes. So, first of all: No, any stimulus money you received will not be subject to income taxes.
Any number of glitches may have resulted in your not getting a stimulus payment or the full amount you were due. Or, perhaps you didn’t register with the IRS.gov non-filers tool last year. You may still be eligible for relief (if you meet the eligibility requirement). You’ll be able to claim the funds through the “Recovery Rebate Credit” when you file your 2020 return. Tax preparation companies, volunteers and tax software should walk you through questions to determine your eligibility.
The stimulus money was paid out in two separate rounds. The payment for the second stimulus relief was automatic, so there’s nothing you can do to make sure you get it before you file your return. If you moved or changed your bank account information, you’ll just have to claim the stimulus credit of up to $600 when you file your return. This is also the case for the first payment.
Because payments are being issued based on information the IRS already has on file, you will not be able to add new routing or account information. If your payment can’t be delivered for any reason and is returned to the IRS, you’ll need to claim the Recovery Rebate Credit when you file your return, the IRS says.
If you didn’t receive a stimulus payment but are entitled to one (or if you were shortchanged), you’ll have to claim the Recovery Rebate Credit when you file your return. The fastest way to get your money is to file electronically and elect to have your refund delivered by direct deposit.
If you received the full amount for both the first and second round of stimulus payments, you don’t have to do anything — including putting any information about the payments on your 2020 tax return.
Stimulus eligibility for recent college students/dependent adults: There has been a lot of misunderstanding around this, including by some tax professionals I consulted. Here’s what the IRS has told me: