Many people are anxious to know when they can begin filing their tax returns for their refunds. As of today, the Internal Revenue Service (IRS) has not released a date yet for returns to begin to be electronically filed (e-filed). Typically, we see electronically filing begin before February 1.
Due to IRS staffing shortages and the time that IRS must now devote to getting the 2nd stimulus payments out, we anticipate this date may be delayed. IRS has indicated that paper-filed returns will take considerably more time to process due to the reduced staff.
Refunds may also take longer for taxpayers to receive this year. Direct deposit of your refund will be the fastest way to receive your refund. If you are claiming the Earned Income Credit or education credits on your tax return, IRS will delay processing your tax return until February 15.
Employers are required to have W2s mailed to or available for employees by January 31. 1099-R forms used to report pension, IRA, 401(k), 403(b), and other retirement account distributions are also required to be mailed by January 31. Since January 31 is a Sunday this year, all due dates of January 31 are pushed to Monday, February 1. The requirement is for them to be postmarked on January 31. Many have been experiencing mailing delays, so we cannot be sure when the forms will be received.
For 2020 you do not have to pay the penalty for not having health insurance. Anyone receiving a Premium Tax Credit on health insurance purchased through the Marketplace must file Form 8962. You will receive Form 1095-A that has the required information to complete the form. The due date for Form 1095-A has been extended from January 31 to March 2.
The employers’ requirement to provide 1095-B or 1095-C to employees has not been suspended. The date employers are required to provide 1095-B or 1095-C forms to employees has been extended from January 31 to March 2.
Most 1099 forms must be mailed or available to taxpayers by January 31. This includes Forms 1099-MISC, 1099-NEC, and 1099-INT. The Form 1099-INT reports interest earned on accounts. The bank, credit union, and other financial institutions are not required to mail a Form 1099-INT unless it is more than $10. You are still required to report the amount even if you earned less than $10. You will need to call your bank or credit union and ask for the amount earned or find it on your year-end bank statement.
Form 1099-B is required to be mailed to you by February 15. Form 1099-B reports the sales of securities for the year. Mutual fund families and some custodians will meet the February 15 deadline. However, many brokerage companies will request extensions until mid-March while they gather information from the mutual fund, REIT, and limited partnership companies. If you have a brokerage account, you must wait for your Form 1099-B to file your tax return.
If anyone paid college tuition in 2020, you will receive a Form 1098-T. The 1098-T form shows tuition paid and scholarships and grants received that were paid directly to the college. The college is required to provide Form 1098-T by January 31. Typically, colleges make the form available online in the student’s college account. If the student cannot find the form online in their account, the student, not the parent, generally must request the form from the financial aid office.
Some students saw a refund of Spring tuition in 2020 due to COVID-19 and colleges moving to online learning. This information is necessary to prepare the tax return and should be part of the proof of the student’s account. This information is generally available in the student’s online account, or the student can request it from the financial aid office.
Many are asking if the IRS has extended the filing deadline for 2020 tax returns. At this time, the answer is no. Filing dates for Individual returns have not been extended. It is possible that an extension could be issued in the next few months. Individuals do have the option of getting the regular extension that has always been available until October 15. This is an extension to file the return. You must pay any anticipated taxes with the extension to avoid a late payment penalty.
It is important to be patient while waiting to file your tax return this year. Your tax documents may be later than expected due to company staffing issues or COVID problems. Setting up online access is the fastest way to obtain your tax documents. Please keep track of tax documents as they are available or arrive. If you are unsure if you are missing any documents, look at last year’s return. Your 2019 tax return will give you a good idea of what documents you need.
It is important to be patient when waiting for your refunds. Staffing shortages and mailing delays are likely to have an impact. Direct depositing a refund will help. Allowing for electronic withdrawal of any balance due can ensure receipt of timely payment. The likelihood is it will all take longer this year.
If you have questions about getting started, give your tax preparer a call. Updates for e-filing start dates and any changes to filing requirements will be announced when they become available.