Stimulus, Unemployment, and Tax Deadline Updates

Keep up to date with details on excess Premium Tax Credit repayments, unemployment compensation, the new tax deadline, and more.

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Updates

April 13, 2021 Update - Excess Premium Tax Credit Repayment

The American Rescue Plan of 2021 provides relief from needing to repay any excess advance Premium Tax Credit payment amounts that would usually need to be repaid on your 2020 tax return. If you purchased health insurance through the health insurance Marketplace or state exchange and received a larger advance payment of the Premium Tax Credit than would normally have been allowed based on your income, you won't have to pay it back on your 2020 tax return. The software has been updated to include this new legislation.

What if I already filed a tax return repaying an excess advance Premium Tax Credit amount?
The IRS is working on making direct adjustments to taxpayer returns that repaid an advance payment of the Premium Tax Credit. The IRS plans to issue refunds without the need for an amended federal return. See IRS.gov for more information.

March 31, 2021 Update - Ready to File Unemployment Compensation Exclusion:

Our software is now ready to handle the unemployment compensation exclusion for the federal tax return. However, some states are not yet ready to handle the change. We will provide state-specific information as you work on your state tax return.

For those who already filed with unemployment compensation: (Filed with us before March 25, 2021)
The IRS is working on making direct adjustments to taxpayer returns that have unemployment income. They plan on sending additional refunds without the need for an amended federal return starting in May 2021.

You would only need to amend your federal tax return if the exclusion of unemployment qualifies you for an additional federal credit or deduction not already included on your original tax return. However, we strongly recommend you wait to receive any and all additional refunds from the IRS before amending your tax return. See IRS.gov for more information.

If your state also allows the unemployment exclusion, you may need to check with your state to see if you need to file an amended state return. Keep in mind that many states haven't yet decided how they will handle those who have already filed. If you want to amend your state tax return for this reason, we suggest waiting until your state makes an official announcement.

March 17, 2021 Update - IRS Extends Filing and Payment Deadline:

New Federal Tax Deadline is May 17, 2021
The Treasury Department and Internal Revenue Service announced that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021.

However, the IRS has not yet provided guidance on when they will be ready to receive returns, where taxes are owed, with direct debit dates after April 15, 2021. We are awaiting word that they have updated their systems with this fix so we can make the change to our software.

State Tax Deadlines May Differ from New Federal Deadline
States are still updating their payment and filing deadlines. Each state might have a different deadline. See State Deadlines

March 11, 2021 Update - American Rescue Plan Act of 2021 (ARPA) signed into law:

The president has signed into law the "American Rescue Plan Act of 2021" (ARPA). Among other things, ARPA:


March 10, 2021 Update - Economic Impact Payments (EIP3)

Congress has passed the "American Rescue Plan Act of 2021" (ARPA).

Third Stimulus or EIP3

Eligible recipients will receive a payment of up to $1,400 for individuals or $2,800 for married couples and up to $1,400 for each qualifying dependent. For filers with income above a certain level, the payment amount will be reduced. Visit our Stimulus Check Calculator to estimate your total payment.

This third round of payments is being distributed automatically, with no action required for eligible individuals. Your payment will be determined by information already on file with the IRS.

For more details regarding payments, please visit IRS.gov/EIP

Can I change my direct deposit on your website for EIP3?
The IRS will use the bank deposit information that they already have on file. Due to time constraints, the IRS is not allowing updates to direct deposit. If the bank account information they have is not valid, they will send a paper check or debit card. If you need to file a 2020 return, we recommend that you file a return with your updated bank routing and account information.

We recommend that you go to their website for information at: IRS.gov/EIP

I haven't received a stimulus payment, what can I do?
If you haven't received your first or second stimulus payment (EIP1 and EIP2), you have the option of claiming this on your 2020 tax return as a Recovery Rebate Credit. Our website is configured to prepare this now. Please continue to the Deductions/Credits section of the software and you'll be asked about your stimulus payments on the EIP Information screen. If you missed the third stimulus payment or EIP3, if you qualify, you'll be able to claim this as a credit on your 2021 tax return, which you'll file in 2022.

I used my refund to pay the preparation fees at FreeTaxUSA. Will my third stimulus payment go to your bank?
The IRS will send your EIP or stimulus payment directly to the bank account that you entered to receive your refund. FreeTaxUSA and our banking partner will not be involved in the distribution of your third stimulus payment. The IRS will update the "Get My Payment" tool soon: https://www.irs.gov/coronavirus/get-my-payment

Unemployment Compensation

The American Rescue Plan of 2021 allows the first $10,200 of unemployment compensation to not be taxable. The IRS has released some initial guidance on how returns should be filed to correctly exclude that unemployment compensation.

For those with unemployment compensation who have not yet filed their tax return:
Our software is now ready to handle the unemployment compensation exclusion for the federal tax return. However, some states are not yet ready to handle the change. We will provide state-specific information as you work on your state tax return.

For those who already filed with unemployment compensation: (Filed with us before March 25, 2021)
The IRS is working on making direct adjustments to taxpayer returns that have unemployment income. They plan on sending additional refunds without the need for an amended federal return starting in May 2021.

You would only need to amend your federal tax return if the exclusion of unemployment qualifies you for an additional federal credit or deduction not already included on your original tax return. However, we strongly recommend you wait to receive any and all additional refunds from the IRS before amending your tax return. See IRS.gov for more information.

If your state also allows the unemployment exclusion, you may need to check with your state to see if you need to file an amended state return. Keep in mind that many states haven't yet decided how they will handle those who have already filed. If you want to amend your state tax return for this reason, we suggest waiting until your state makes an official announcement.

Tax Deadlines

The Treasury Department and Internal Revenue Service announced that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021.

However, the IRS has not yet provided guidance on when they will be ready to receive returns, where taxes are owed, with direct debit dates after April 15, 2021. We are awaiting word that they have updated their systems with this fix so we can make the change to our software.

State Tax Deadlines May Differ from New Federal Deadline
States are still updating their payment and filing deadlines. Each state might have a different deadline. See State Deadlines

Child Tax Credit

The American Rescue Plan of 2021 increases the Child Tax Credit amounts for qualified dependents for 2021. This will not affect the Child Tax Credit on your current, 2020 return.

Do I need to amend my tax return due to the new bill that was passed increasing the child tax credit?
The new legislation affecting the Child Tax Credit will affect your 2021 tax return. The 2020 tax return that you file this year will not be affected by this new legislation, so you don't need to amend your 2020 return.

Excess Premium Tax Credit Repayment

The American Rescue Plan of 2021 provides relief from needing to repay any excess advance Premium Tax Credit payment amounts that would usually need to be repaid on your 2020 tax return. If you purchased health insurance through the health insurance Marketplace or state exchange and received a larger advance payment of the Premium Tax Credit than would normally have been allowed based on your income, you won't have to pay it back on your 2020 tax return. The software has been updated to include this new legislation.

What if I already filed a tax return repaying an excess advance Premium Tax Credit amount?
The IRS is working on making direct adjustments to taxpayer returns that repaid an advance payment of the Premium Tax Credit. The IRS plans to issue refunds without the need for an amended federal return. See IRS.gov for more information.

Get started on your 2020 tax refund