Tax return filing deadline

You may have heard already, but if not, the IRS pushed back the filing deadline for individual tax returns to May 17, 2021.  Thus, you have an extra month to file and pay any tax owed with your personal 2020 tax return.  There is nothing you must do to request the extra month to file. It is automatically granted.  If your tax return can’t be filed by May 17, then we can and will file an extension for you, which allows you until October 15, 2021, to file your tax return.  However, taxes due must still be paid by May 17.

This delayed one-month filing and payment deadline is applicable to 2020 individual Form 1040 tax returns only.  You are also allowed until May 17 to make contributions to your IRAs and HSAs applicable to your 2020 tax year.  However, the delay is not applicable to trust, gift, or corporate income tax returns, which are still due by April 15.  In addition, the IRS stated it is not applicable to 1st qtr 2021 estimated tax payments, which are also due April 15.  It appears most states have also pushed back their filing deadline to mirror the IRS change.

2020 law changes

The American Rescue Plan Act of 2021 (ARPA) was enacted March 11, 2021, and has two provisions that affect the tax year 2020. First, up to $10,200 of unemployment benefits income received in 2020 is tax-free if your total adjusted gross income is under $150,000.  The IRS announced that if you already filed your 2020 income tax return with unemployment benefits as taxable, then do not file an amended income tax return.  They tentatively believe they will be able to issue refunds without having to file an amended tax return.  If you haven’t filed your tax return yet, we will take care of treating any unemployment benefits as nontaxable as allowed.

Second, if you received an advance premium tax credit (APTC) for health insurance premiums paid through the government marketplace, and if the actually allowed premium tax credit (PTC) on your 2020 income tax return is less than the APTC received, you are not required to repay any of the APTC on your 2020 income tax return.  As of now, there is zero guidance from the IRS on how to claim this, as the law was just passed in mid-March.  However, if you received APTC on marketplace premiums, we will watch for this when we prepare your tax return so that repayment does not occur.

PPP loan update

The SBA announced that businesses can choose any covered period they want to use PPP loan proceeds to pay covered expenses such as payroll, rent, and utilities, so long as it is a minimum of 8 weeks and a maximum of 24 weeks.  Therefore, if it only takes you 14 weeks to spend your PPP loan proceeds on allowed expenses such as payroll, rent, and utilities, you may apply for forgiveness after 14 weeks.  Previously you had to choose either an 8 or 24 weeks covered the period after loan funding.  Now you have the flexibility to choose any period from 8 to 24 weeks.

Future tax updates

There were other tax provisions in ARPA that affect the 2021 tax year, which we will review and advise in a future email.  In addition, there are indications from Congress on a forthcoming tax bill.  Currently, these are only discussions, so nothing definitive.  We urge patience before reacting to rumors about impending tax law changes.  As of now, they are only rumors.  As with any White House change, there is typically a tax bill to emerge and we do expect something to happen this year.  We will advise as to actual law changes as they progress to reality.