2021 Tax Season
The Washington Post rated the start of the 2021 IRS tax season as late, tedious and frustrating. But for the IRS itself, it corresponds to "planning designed with the individual taxpayers in mind, aiming at minimizing delays in issuing refunds."
The editorial team of the award-winning print and digital newspaper bases its hasty rating on the delays to process the 2019 refunds and anarchy resulting from payments of the second wave of economic impact payments, or pandemic aid, approved on December 27th.
It is a fact that the tax season that traditionally begins in the last week of January, this year will start on Friday, February 12, when the IRS will start receiving and processing individual returns for the 2020 financial year. You should remember, or know, that a change of the start date of the tax season is nothing new and since 2007, there have been 5 cases.
But don't bank on it, you can coordinate a virtual meeting with your tax expert and get your tax documentation in order. In the meantime, there are a couple of new features in the 2021 IRS tax season that you should keep in mind, we summarize them here.
2021 Tax season: What will be the deadline?
You might assume, given that the start of the 2021 tax season was delayed by about two weeks, that the deadline may also have changed, but we clarify that up to the date of this post, there is no indication that the deadline, by tradition scheduled for April 15, will be extended, as happened last year.
However, in the context of the health crisis, it is still possible that an announcement could be issued; regardless, the IRS expects to process about 150 million tax returns in this period of time, so don't wait for the last moment.
Other key dates of the tax season
In any tax return season, there is a schedule to keep in mind, we summarize it:
January 15: Opening of the IRS Free File. This is when taxpayers can start filing their returns through accredited tax software companies, but these will be forwarded to the IRS on February 12th.
January 29: "Tax Credit Awareness," an outreach action that seeks to educate about the offer of available tax credits.
February 12: Start of the 2021 tax season, the IRS begins receiving and processing individual returns.
February 22: Possible update of the IRS.gov tool Where's My Refund; for taxpayers who have earned income tax credit (EITC) and child tax credit (ACTC).
March 1-5: Arrival of the first refunds for claims under the PATH Act, to those taxpayers who pay through electronic direct deposit.
April 15: Deadline for filing tax returns.
October 15: If you requested an extension to file your return, this will be the new deadline.
In case of any modification after the date of publication of this post, you will be able to consult the schedule in the IRS Newsroom portal .
Recommended Article: How can your accountant help you plan for 2021?
Do EIP payments, or Covid financial aid, affect my taxes?
You have nothing to worry about in this regard, the two rounds of economic impact payments (April and December) are not considered taxable income, that is, they are not taxable and they will not affect tax refunds.
The IRS portal clarifies that those who have received economic impact payments for the approved amount, without any observations, do not have to include that figure on their return and those who received only a fraction of the corresponding amount or did not receive it despite being eligible, can submit a recovery rebate credit claim.
Final considerations about the 2021 IRS tax season
The IRS states that if you submit your return electronically and provide information for direct deposits, you can be among the 9 out of 10 taxpayers who are "problem-free" and will be able to receive their tax refund within 21 days of submission.
The tax return for individuals can be very simple, although depending on the credits you apply to, the geography, the deductions made, any prior forms (W-2; 1099 forms) the process can become difficult. So, seek the right advice!