A COVID-Related Development for 2020 Individual Tax Returns

At Maicher CPA Pllc, we provide a full range of tax services to help clients reduce taxes.  There is an important COVID-related development along with other developments affecting 2020 individual tax returns.

  1.   The IRS has extended the deadline for filing 2020 individual federal income tax returns to May 17, 2021.  This extension includes tax payments as well.  However, be aware that:
  • This extension does not apply to corporations or trusts.
  • This extension does not apply to first-quarter 2021 estimate payments for income.
  • For those owed refunds, refunds are only issued when you file your return.
  • Individuals do not need to file a form for this automatic extension.
  • Minnesota has similarly extended the deadline for individual returns and payments, but extension by other states require confirmation.    
  • Lastly, if you need an extension to file, you will need to file IRS Form 4668 by no later than May 17, 2021 to receive an automatic six-month extension but this filing extension does not extend your payment due date.  
  1. Income tax brackets increased in 2020 to account for inflation as follows:

  1. For 2020, the long-term capital gains rates for individuals are as follows:  (a) for unmarried individuals with taxable income of over $40,000, the rate is 15% and 20% for taxable income of over $441,450; (b) for married individuals filing joint returns, the rate is 15% for taxable income of over $80,000 and 20% for taxable income over $496,600; and (c) for heads of households, the rate is 15% for taxable income of over $53,600 and 20% for taxable income for over $496,050.  

Take-away:  Tax rules are in flux but the tax professionals at Maicher stays on top of these changes.   Call Maicher today for an appointment for your 2020 tax return.       

 

Sources:

IRS Publication – “Tax Day for individuals extended to May 17: Treasury, IRS extend filing and payment deadline.” (March 18, 2021).

IRS Publication (Topic No. 409) – “Capital Gains and Losses.”  (March 12, 2021).

IRS Publication – “IRS Provides Tax Inflation Adjustments for Tax Year 2020.”  (December 17, 2020).