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This week marks the formal start of tax season for 2022 returns, but 2020 returns are also back in the headlines.
Many Americans may still be due money from their tax returns for the 2020 tax year, but it is now up to them to find and claim it.
Under the American Rescue Plan Act, individuals who received unemployment benefits in 2020 and earned less than $150,000 a year might deduct up to $10,200 from their taxable income (or double that for couples).
Read Also: Who's Getting SNAP Benefits Until March?
Why May You Still Have Money to Claim From 2020 Taxes?
Because this one-time pandemic-relief adjustment was made in March 2021, after tax season had begun and 76 million Americans had already submitted their taxes, the IRS stated that it would make the necessary changes. However, the IRS announced earlier this month that it had completed its revisions and that anyone it may have missed must now file an updated return.
Essentially, the IRS has returned people the responsibility of amending outdated tax returns. Accountants say this might be a significant hardship for anyone unfortunate enough to submit a 1040-X, the revised tax form required to rectify the error, even if it is difficult to estimate how many people are impacted.
It is more complicated than removing unemployment benefits from your taxable income or adjusted gross income (AGI), according to Mark Steber, chief tax information officer at tax preparation firm Jackson Hewitt.
According to USA Today, the IRS observed that a significant number of the nearly 14 million amended tax forms included revisions to:
- Additional Child Tax Credit
- Advance Premium Tax Credit
- American Opportunity Tax Credit
- Earned Income Tax Credit
- Recovery Rebate Credit
- Premium Tax Credit
The IRS made automated changes for a few of these individuals but has now disclosed that this procedure is complete. Those who feel they should have gotten this $10,200 tax deduction must now file an updated tax return to rectify the error and recover the owed funds.
The IRS has not offered a number indicating how many individuals are affected. However, CPAs caution that submitting a 1040-X amended return is not the easiest process for non-accountants (and cannot be done with the IRS Free File program). As such, accurate filing may demand the aid of a licensed tax professional. Because it is more challenging to deduct the credit from the adjusted gross income.
Due to the manual processing of the revised return by an IRS agent, it may take some time (in some circumstances, months) for the refund to be issued. However, significant money may be at stake that makes the wait worthwhile: refunds have averaged $1,232.
In general, taxpayers have up to three years to file an amended return, so you must file as soon as feasible for 2020. The good news is that many individuals are already using a professional tax preparer for their 2022 tax returns, and modifications for 2020 may be incorporated into the process, as per GoBankingRates. Before submitting your taxes, you should consult a tax professional if you still need to, especially if they are difficult.
Tax Filing Season 2023
On Monday, January 23, 2023, the IRS began receiving tax returns for the 2023 tax filing season. You may now submit your taxes if you have all the necessary documentation from your company, bank, and other agencies. Remember that the earlier you file, the sooner you will receive your tax refund. Tuesday, April 18, 2023, is most Americans' deadline for paying taxes.
The IRS said on January 11 that storm victims in California now have until May 15, 2023, to file federal individual and company tax returns and make tax payments. Individuals residing in locations designated by the Federal Emergency Management Agency are eligible for the IRS extension (FEMA).
The included areas encompass many states, such as Los Angeles and San Francisco. According to the IRS, you should request a filing deadline extension. Form 4868 must be filed to gain an automatic 6-month extension to file your return. A filing extension does not extend the deadline to pay. On any tax not paid by the initial due date of your return, you may be liable to a late payment penalty, as per CBS News.
E-filing, often known as online filing, offers as many choices for completing the task as there are forms to complete. It may depend on your income, your budget, the intricacy of your tax return, and your patience with filling out forms to determine which online filing option is best for you.
Related Article: Who May Receive $7,500 Tax Credit?
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