Because of COVID-19, the tax year that ended December 31, 2020 will be unique. We suggest talking to your tax advisor or a licensed tax preparer for guidance. We’ve also assembled some key updates here, including important dates and answers to common questions.
When are the important IRS dates for the 2020 tax year?
The IRS has announced the following dates for tax year ending December 31, 2020:
January 15 - IRS Free File opens. Taxpayers can begin filing returns through Free File partners; tax returns will be transmitted to the IRS starting February 12. Tax software companies also are accepting tax filings in advance.
February 12 - IRS begins the new tax season, with individual tax returns being accepted and processing beginning.
February 22 - The irs.gov Where's My Refund? tool will be updated, including for those claiming EITC and ACTC (also referred to as PATH Act returns).
March 1 - For people who filed electronically with direct deposit, tax refunds begin reaching accounts, including for those claiming EITC and ACTC (PATH Act returns).
May 17 - Deadline for filing 2020 tax returns.
October 15 - Deadline to file for those requesting an extension on their 2020 tax return. Check out irs.gov for information on requesting an extension.
What are the dates for estimated tax payments this year?
Although the IRS extended the payment times for quarterly estimated tax payments in 2020 in response to COVID, the payment due dates in 2021 have not been extended. Despite the tax filing deadline having been extended to May 17 for federal taxes, many taxpayers who owe estimated tax payments still need to pay them by the standard deadlines.
Check out irs.gov for more information.
Are California tax deadlines extended?
Yes. California extended the filing date and payment due date in response to COVID. For the tax year ending December 31, 2020, California has said that the normal deadline for your tax return and any money you owe is May 17, 2021. While California does grant extensions as late as October 15, 2021 to file your state tax return, any state tax payments may still be due by May 17, 2021. Talk to your tax advisor, and learn more on the California Franchise Tax Board website.
What about required minimum distributions (RMDs) from retirement accounts?
In March 2020, Congress suspended required RMDs from retirement accounts such as IRAs and 401(k)s, and the IRS later clarified that certain withdrawals (distributions) could be returned by August 31, 2020 to avoid penalties and taxes. If you withdrew funds from your retirement during 2020, please consult your tax advisor or a licensed tax preparer regarding how to report any distributions and/or paybacks. The government has not suspended RMDs for 2021.
What about other withdrawals from retirement accounts?
In 2020, Congress allowed people affected by the pandemic to make a certain amount of withdrawals from retirement plans such as 401(k)s, IRAs, and Roth IRAs – with typical penalties waived in many cases. Even with penalties waived, such withdrawals may still be taxable, unless the funds were returned to the same or similar retirement account. Consult your tax advisor regarding how to handle reporting this on your 2020 tax return. For 2021, Congress has not authorized tax-free or penalty-free COVID-related withdrawals.
What if I still need an IRS tax extension?
If you need even more time to file, request a filing extension by using Form 4868, available on irs.gov. Keep in mind, however, that getting a filing extension until October 15, 2021 will not necessarily give you additional time to pay taxes owed. Talk to your tax advisor to learn more.
Should I file electronically or via paper this year?
The IRS and the California Franchise Tax Board (FTB) have urged taxpayers and tax professionals to submit all tax returns electronically. Due to office closures and staff shortages, the IRS and FTB will be slower to process paper returns. However, even if IRS or FTB offices are not open and you choose to file in paper, your tax return still needs to be submitted on time. The postmark date on any paper mailings will be used to determine if you meet the tax deadline.
Are there other federal tax changes I should be aware of?
Talk to your tax advisor, and also check out the latest version of IRS Publication 17, which covers general rules for filing a federal income tax return. Tax year 2019 saw several changes that could affect individual taxpayers – and these changes may not have affected you until now. Talk to your tax advisor about your individual circumstances to determine if there are changes that affect you.
Should I do direct deposit for my tax refund?
Yes, if you want to get your refund quickly. Because of IRS and FTB offices being closed or understaffed due to COVID, filers are encouraged to opt for direct deposit to get their refund.
Our routing number is 321076470 for direct deposit. To get your account number for direct deposit, log in to Patelco Online™, click or tap on the account, and then select the Account Details tab. Your MICR ACCOUNT NUMBER is your full account number that you need (along with our routing number) to get your refund via direct deposit.
What’s different about charitable donations for 2020?
Typically, the amount of charitable cash contributions that you can deduct (on Schedule A) as an itemized deduction is limited to a percentage (usually 60 percent) of your adjusted gross income (AGI). For the tax year that ended December 31, 2020, however, you may be able to deduct certain contributions of up to 100 percent of your AGI. Contributions that exceed that amount can even carry over to the next tax year. To qualify, the contribution must be:
- a cash contribution
- given to a qualifying organization
- made during the calendar year 2020
Contributions of non-cash property (like furniture or secondhand clothing) do not qualify for this benefit. However, you can still claim non-cash contributions as a deduction, subject to the normal limits. Check with your tax advisor to see if your 2020 donations qualify.
The Coronavirus Aid, Relief and Economic Security (CARES) Act, enacted last spring, also includes a special $300 deduction designed especially for people who choose to take the standard deduction (rather than itemizing their deductions). That means that if you decide to take the standard deduction (instead of itemizing deductions on Schedule A), you may be eligible for up to an additional $300 deduction for charitable contributions made during 2020. This extra break only applies to donations made by cash, check, or credit card – not for donated property like furniture or secondhand clothing. Check with your tax advisor to see if your 2020 donations qualify.
Does Patelco offer any discounts for filing taxes?
Yes, Patelco members have exclusive access to a TurboTax discount – learn more about your exclusive member discount.
What is the local property tax deadline for 2021?
Although many counties offered economic relief to homeowners in 2020 by extending property tax deadlines or waiving penalties/fees for late property tax payments, that is not the case for most counties in 2021. If you still have questions, contact your local government's tax office to check on this year’s property tax deadlines.
What if I worked remotely in a state different from where I usually live or work?
You could end up having to file a tax return – and perhaps pay taxes – to more than one state. This is a highly complex area with rules that vary from state to state. Consult a tax advisor for assistance if you think this situation may apply to you.
What if I have more tax questions?
Talk to your tax advisor or licensed tax preparer.
What if I can’t pay my tax bill?
The IRS, as well as state tax boards, often offer payment plans. Your tax advisor or licensed tax preparer can help you decide what to do.
Patelco Credit Union does not provide tax advice. For such guidance, please consult a qualified tax professional.