New Tax Changes That Could Affect Your 2020 Return
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Here's your money briefing for Wednesday, March 31st. I'm J.R. Whalen for The Wall Street Journal. Figuring out your taxes is hard enough. Keeping up with the numerous changes the IRS has put into place, some in just the past few days, well, that can be enough to make your head spin.
Congress passed a big stimulus bill in March, and it had retroactive changes for 2020, and the IRS has to cope with them. And so do taxpayers and their advisors, by the way.
Coming up, our tax reporter Laura Saunders will go through the latest changes and how they could affect your 2020 tax return. That's after the break.
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Anybody going through paperwork and preparing their tax returns knows that 2020 was a crazy year.
What recent IRS announcements could change my 2020 tax return?
Well, it's getting just a little crazier. The IRS has announced some changes to rules and deductions that can complicate the math on your return. Fortunately, our tax reporter Laura Saunders is with us to help clear up some of the confusion. Laura, thanks for taking the time to talk.
Thanks so much for having me.
So the IRS has announced several late changes regarding 2020 taxes, the taxes people are working on right now. We'll run through them in a moment. But Laura, these changes are coming so late in the tax season. Is this typical?
No, it's not typical at all. And remember that it's not the IRS so much as it's Congress. Congress passed a big stimulus bill in March, and it had retroactive changes for 2020, and the IRS has to cope with them. And so do taxpayers and their advisors, by the way.
Yeah, it's a lot of work for a lot of people. So the new tax filing deadline for this year is May 17th. Who does that apply to?
Well, it has very narrow range. Actually, it applies to individuals. It does not apply to corporations and, you know, many businesses unless it's a gig business or something like that. But it's just for basically for individual tax filings, not nonprofits.
OK, but even with the new date in May, if someone has to file an extension, what would they do?
Why did Congress' March stimulus create late changes to 2020 taxes?
Well, you can still get an extension. It's usually a six-month extension from April 15 to October 15. This year it goes from May 17 till October 15. So you can still get the extension, but it doesn't go an extra month.
Now, does the new tax filing deadline impact contributions to retirement accounts like traditional IRAs?
Well, it's a good question. I'm glad you asked me. We didn't know the answer to that until Monday. Now, I think a lot of people assumed that the IRS delayed the deadline for filing your taxes to May 17th, that the IRA deadline would be delayed as well. But they actually had to look for the legal justification and so on and so forth. And they found it. And so for Roth IRAs, traditional IRAs, HSAs and a few other things, the deadline has moved from April 15th to May 17th. So you have a little bit longer to make those contributions.
Now, the IRS also said just this week that COVID-19 protective equipment like face masks and hand sanitizers are tax deductible for 2020.
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