IRS Announces feb 12th start of tax season
The IRS announced on January 15th, 2021 that the official "start" to tax season 2021 will be on Friday, February 12th. That is the first day that IRS will accept tax returns for processing. This date is over two weeks later than the 2020 start date (which was January 27, 2020) and is needed due to changes made to 2020 tax law in late December (including the approval of a second Economic Stimulus Payment program signed into law on December 27th 2020 as part of the Consolidated Appropriations Act).
There have been several changes to Calendar Year 2020 taxes. Many of these are a result of the Covid-19 CARES Act and the Consolidated Appropriations Act, 2021.
• For student loan payments made after March 27, 2020 and through 2025 employers can pay the principal or interest of an employee’s qualified education loan up to $5,250 per year and exclude the benefit from the employee’s taxable income under a qualified educational assistance program.
• Up to $300 of qualified charitable contributions are deductible as above-the-line deductions in calculating AGI without the taxpayer having to itemize deductions. For taxpayers who itemize, the 60% AGI limitation for cash contributions is increased to 100%
• If you did not receive your full Economic Impact Payment in either the Spring of 2020 or January 2021 (for example, due to income above the threshold amounts in 2018/2019), you may take a "Recovery Rebate Credit" on your 2020 return.
• If your Economic Impact Payment EXCEEDS the 2020 credit allowed (for example, your income increases in 2020 and is now above the phase-out threshold), you are NOT required to repay the excess amount.
• The "Standard Deduction" has increased slightly for 2020 to: $12,400 single; $24,800 married, $18,650 for head of household. Arizona has adopted the same standard deduction.
• Under the CARES act, no Required Minimum Distribution is required for calendar year 2020 from IRAs or qualified retirement plans. This is a one year exclusion and the RMD will be back in place for 2021.
• The maximum age limitation for making deductible traditional IRA contributions no longer applies for tax years beginning with 2020. You must still have earned income in order to qualify for the deduction.
• The contribution limit for IRA accounts is $6,000 for 2020. Those 50 and older can still contribute an additional $1,000.
Please contact our office if you have questions on any of the changes.
Federal tax calendar
15th - Payroll deposits due for monthly depositors
20th - Sales tax due
15th – Fourth estimated tax payment due
31st – Quarterly reports due for fourth quarter
15th – Partnership and S-Corporation tax returns due
15th – Individual & C-Corporation tax returns due
15th – First estimated tax payment due
30th – Quarterly reports due for first quarter
15th – Second estimated tax payment due
31st – Quarterly reports due for second quarter
15th – Third estimated tax payment due
31st – Quarterly reports due for third quarter
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