American Relief Act and EIP 3

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EIP 3 Payments: Treasury successfully processed 90 million payments this past week using direct deposit for the stimulus (EIP 3) payments representing about $242 billion.  In addition, they did send out approximately 150 thousand checks for $442 million for EIP recipients.   The next round of EIP 3 for this coming week will be about 30 million payments. The IRS expects to continue to send out payments weekly until they cover everyone in which they have information.  

Other Elements of the Relief Act that impacts the Tax Preparation community:   There were also a number of tax law changes in that bill that impact taxpayer not only for next year but also this current filing season.  

Unemployment Compensation Exemption The act makes the first $10,200 in unemployment benefits tax-free for 2020 tax returns in this current filing season.  This retroactive benefit is intended for each person with incomes less that $150,000.   The IRS will be providing guidance soon on how to handle this feature on not only already filed returns, but also for 2020 returns you are preparing now and in the future.  Look out for news from IRS very soon on this topic.  

Child Tax Care Credits Increased The act also increased the amount of the tax credit for 2021 tax returns for next tax season, to $3000 per child, as well as liberalizing some of the rules on the existing credit.  One of the features in the act was to instruct the IRS to make prorated payments of this new credit to those qualifying starting later in 2020.    

The IRS will provide guidance on this feature later in the year as well as instruction on options and tools to opt out of the prepayment feature.  
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IRS to Handle Unemployment Returns.

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Returns filed with unemployment benefits prior to the $10,200 exclusion should not be amended. The IRS has indicated it will refigure taxes on these returns and adjust the taxpayer’s account accordingly. The IRS will then send any refund amount directly to the taxpayer.

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IRS to Extend Filing Season

The IRS has announced that it will extend the filing season until Monday, May 17, 2021. This one-month extension is for filing and payment.

The Treasury Department and Internal Revenue Service announced today that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. The IRS will be providing formal guidance in the coming days.

“This continues to be a tough time for many people, and the IRS wants to continue to do everything possible to help taxpayers navigate the unusual circumstances related to the pandemic, while also working on important tax administration responsibilities,” said IRS Commissioner Chuck Rettig. “Even with the new deadline, we urge taxpayers to consider filing as soon as possible, especially those who are owed refunds. Filing electronically with direct deposit is the quickest way to get refunds, and it can help some taxpayers more quickly receive any remaining stimulus payments they may be entitled to.”

Individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without penalties and interest, regardless of the amount owed. This postponement applies to individual taxpayers, including individuals who pay self-employment tax. Penalties, interest and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. Individual taxpayers will automatically avoid interest and penalties on the taxes paid by May 17.

Individual taxpayers do not need to file any forms or call the IRS to qualify for this automatic federal tax filing and payment relief. Individual taxpayers who need additional time to file beyond the May 17 deadline can request a filing extension until Oct. 15 by filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. Filing Form 4868 gives taxpayers until October 15 to file their 2020 tax return but does not grant an extension of time to pay taxes due. Taxpayers should pay their federal income tax due by May 17, 2021, to avoid interest and penalties.

The IRS urges taxpayers who are due a refund to file as soon as possible. Most tax refunds associated with e-filed returns are issued within 21 days.

This relief does not apply to estimated tax payments that are due on April 15, 2021. These payments are still due on April 15. Taxes must be paid as taxpayers earn or receive income during the year, either through withholding or estimated tax payments. In general, estimated tax payments are made quarterly to the IRS by people whose income isn’t subject to income tax withholding, including self-employment income, interest, dividends, alimony or rental income. Most taxpayers automatically have their taxes withheld from their paychecks and submitted to the IRS by their employer.

State tax returns

The federal tax filing deadline postponement to May 17, 2021, only applies to individual federal income returns and tax (including tax on self-employment income) payments otherwise due April 15, 2021, not state tax payments or deposits or payments of any other type of federal tax. Taxpayers also will need to file income tax returns in 42 states plus the District of Columbia. State filing and payment deadlines vary and are not always the same as the federal filing deadline. The IRS urges taxpayers to check with their state tax agencies for those details.

Winter storm disaster relief for Louisiana, Oklahoma and Texas

Earlier this year, following the disaster declarations issued by the Federal Emergency Management Agency (FEMA), the IRS announced relief for victims of the February winter storms in Texas, Oklahoma and Louisiana. These states have until June 15, 2021, to file various individual and business tax returns and make tax payments. This extension to May 17 does not affect the June deadline.

For more information about this disaster relief, visit the disaster relief page on IRS.gov.

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Economic Impact Payment Status Available

Find when and how we sent your 2021 Economic Impact Payment with the Get My Payment tool.

Get My Payment

Find help with this tool with Frequently Asked Questions.

Get My Payment updates once per day, usually overnight. Do not call the IRS. Our phone assistors don’t have information beyond what’s available on IRS.gov.

Previous payment information is no longer available in Get My Payment. See First and Second Payment Status.

When We’ll Send Your 2021 Payment

The first batch of payments will be sent by direct deposit, which some recipients started receiving as early as March 12.

Additional batches of payments will be sent in the coming weeks by direct deposit and through the mail as a check or debit card.

Status Messages

You’ll see one of these messages when you use Get My Payment:

Payment Status: 

  • A payment has been processed, a payment date is available and payment is to be sent either by direct deposit or mail. Note: mail means you may be issued an EIP Card or a check.

or

  • You’re eligible, but a payment has not been processed and a payment date is not yet available.

It will not show the amount of your 2021 Economic Impact Payment.

Payment Status Not Available: We haven’t yet processed your payment or you’re not eligible for a payment.

Need More Information: Your payment was returned to the IRS because the Postal Service was unable to deliver it. Only people who get this message can use the tool to give us bank account information.

Get help with this tool in Get My Payment Frequently Asked Questions.

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Unemployment Compensation – New Exclusion

Please stay tuned for information about the Advance Premium Tax Credit (APTC) — the IRS’s first priority was the Unemployment Exclusion change and we expect more information on the APTC in the near future.

The IRS has advised that you should not yet amend returns that had Unemployment Compensation or Repayment of the Advance Premium Tax Credit. Official IRS guidance is forthcoming.

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Third Stimulus Payment Update

The American Rescue Plan Act of 2021, which was signed into law on March 11, includes a third round of stimulus payments. The IRS will begin the process of depositing payments into accounts immediately, with the first wave of direct deposits hitting accounts early next week.

It is our understanding the IRS will use direct deposit (DD) information from 2020 and 2019 tax returns, with 2020 taking precedent if available. If DD info is not present on tax returns, the IRS will likely use DD info entered by the taxpayer into the Get My Payment (GMP) tool. If no DD info is available, the taxpayer will receive a check or debit card.

The GMP tool will not be updated with EIP3 data before Monday, March 15. Also, we don’t believe the IRS will be collecting any additional DD info through the GMP tool for EIP3.

Payments received in this third round of stimulus do not impact 2020 tax returns.

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Unemployment and Premium Tax Credit – ARP Act

The American Rescue Plan Act of 2021 makes a portion of unemployment compensation non-taxable for certain filers and eliminates repayment of excess funds received through the Advance Premium Tax Credit.

We ask for your patience while we work closely with the IRS and state taxing authorities to implement any necessary changes.

We know many of you are holding 2020 returns that have unemployment benefits or the Advance Premium Tax Credit. We expect the IRS to issue official guidance on these items in the near future.

For returns that have been filed with these items, we advise that you hold off on filing amended returns until the IRS provides official guidance.

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March 15 Deadline – Partnerships and S Corps

The deadline for filing calendar-year partnership and S corporation returns is March 15, 2021. These returns must be filed (e-filed or postmarked) by midnight (local time) on March 15, 2021. Fiscal-year returns will be due the 15th day of the 3rd month following the year-end.   

Both partnership and S corporation returns are allowed a six-month extension. Payment must accompany the return or extension if there are taxes due. An extension of time to file does not extend the time to pay taxes.

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