If you’re currently working to get your federal and state income taxes completed, these updates and extensions are what you need to know now.
2020 tax filing deadline extended until May
The federal tax filing and payment due date for individuals has changed to May 17, 2021. The North Carolina Department of Revenue also extended filing and payment deadlines to May 17, 2021.
Taxpayers also won’t be assessed penalties and interest, regardless of the amount owed on 2020 federal income tax payments, between now and mid-May. Tax fees will begin to accrue on any remaining unpaid balances after that.
Review new IRA and Health Savings Account limits
Working families could see bigger tax breaks
The Child and Dependent Care Tax Credit, which helps working families offset the cost of care for children under 13 and other dependents, has been significantly expanded for tax year 2020. The change makes more people eligible, and many recipients will get a bigger tax break.
Tax relief for unemployment benefits
Those who received unemployment benefits last year and filed their taxes before the American Rescue Plan Act of 2021 (ARPA) may have been taxed on the full benefit amount. ARPA, enacted after tax season began, changed the tax requirements.
Now the first $10,200 of unemployment income is tax-exempt for households with an adjusted gross income of $150,000 or less. State taxes may still apply. The IRS will recalculate the taxable amount of unemployment compensation and either automatically refund you the difference or apply the difference to other outstanding taxes owed, starting in May and continuing through the summer.
We’ve got you covered for tax season
You may qualify for free tax help offered by federal government programs such as VITA or TCE.
Your Credit Union provides information year-round to help you make strategic tax moves to improve your finances.