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Just landed, this tax season is messy enough

The 1.9 trillion stimulus package has just been passed in Congress and will be signed into law by the President on 3/12/2021. This makes this tax season more complicated.

Originally this year’s tax season started late enough. The IRS started accepting tax forms on 2/12/2021. Normally, it started in January. Now it changes in the midseason, everything has become complicated.

The tax forms for 2020 will be changed according to the Act. The most important ones are: 1) The first $10,200 ($20,400 if both husband and wife have unemployment benefits) of the unemployment benefits of taxpayer whose income is less than 150,000 in 2020 is tax-free. 2) Taxpayers received too much Obama premium credits in 2020 would not have to pay back the excess.

The bill will be signed by the President on Friday and become law. Next, the Treasury and the Internal Revenue Service will get busy, issuing guidelines, changing tax forms, and updating the system. . . etc. I do not know how quickly these tasks can be completed, and it may take several weeks. Before the bill was passed, the IRS Commissioner said that once the bill passed, they would stop processing tax returns because the system needs to be updated.

For those who have not file yet, we just have to wait and see. Because you do not want to pay a large tax bill and prevent necessity to file an amended tax return or take other steps to reclaim the refund.

For those who have already filed, you also need to wait. See if it is possible that the IRS can automatically adjust the system to make an adjustment on the tax return without the taxpayer having to make an amended tax return and submit it again. In my opinion, the chance of automatic adjustment is small because they are too busy. If they can not do an automatic adjustment, you have to do an amended tax return. Just wait until after April 15th to do it, because it is better to wait until the refund or tax payment is cleared.

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Brian Fang, EA
Brian Fang, EA
Mar 12, 2021


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