The announcement of an extension for filing and payment of taxes this year does give people some breathing room as far as sorting out some issues brought about by the stimulus package that passed after the start of tax season, though we are still waiting guidance on some issues, as well as software updates to address the unemployment benefit deduction.
Here is what we can tell you:
- Business Bookkeeping Services does not have any information about individual clients’ stimulus payments.
- IRS issued a press release today, March 22, announcing the disbursement of more stimulus payments. Direct deposit payments should be in bank accounts by March 24, 2021. For those without direct deposit, you are advised to keep an eye on your regular mail for paper checks and/or prepaid debit cards. Visit the online press release here for more information about what to look for so you don’t accidentally throw it away!
- If you think you are eligible for a payment and have not received it yet, you can check the Get My Payment tool on IRS.gov on to see if the your payment has been scheduled. The site has detailed information and easy-to-follow instructions.
- Any payments you received from the three rounds of economic stimulus are not taxable, but they must be reported on your returns (Rounds 1 & 2 for 2020; Round 3 for 2021). Because of this, everyone needs to keep a record of these payments, including the amount(s) you received and when. No one wants to backtrack at the end of the year to try and find information from 10 months before, so save yourself the trouble and start a tax folder for 2021 right now.
- For people who received unemployment benefits in 2020 and filed their taxes before the American Rescue Plan stimulus package passed, IRS is reinforcing previous guidance asking taxpayers not to file amended returns. The plan to address these discrepancies is through software designed to identify and correct returns that are eligible and automatically issue refunds. We do not, however, have a timeline for when this software will launch.
- The recent notices from IRS have come while we continue to await guidance from Massachusetts on how to handle the $10,200 stimulus unemployment income deduction at the state level. We are continuing to move forward with what we can in the meantime.
Don’t forget to start your tax folder for next year! Hopefully some things will be back to normal by then, but you will still need to know how much stimulus money you received this year.