7 Things You Need To Know When Filing Your Tax Return This Year

Shot of a young couple going through paperwork at home.
shapecharge / Getty Images

There are were already some important changes coming to how you pay your taxes, and then with less than a month before the traditional Tax Day, the IRS switched things up again.  Most notably, the deadline for filing taxes was pushed back one month to May 17, despite the IRS unambiguously stating earlier in the year that there would be no 2021 extension.

Check Out: Don’t Miss Out on Nominating Your Favorite Small Business To Be Featured on GOBankingRates — Ends May 31

The IRS was forced to deal with a shortened tax season in 2020 thanks to a July 15 filing extension for tax year 2019. Then a last-minute blizzard of new legislation gummed things up even more just as 2021 was about to begin. The new year brought new stimulus, new checks, and new backlogs. With the IRS under such heavy pressure and its phone lines jammed 24/7, it’s important that you’re up to date with everything you need to know about filing taxes for the year if you want things to go smoothly.

Find Out: Tax Year Deadline Dates You Need To Know

Save for Your Future

1. The Tax Year 2020 Filing Deadline Has Been Extended

The April 15 deadline has been extended once again. Despite the IRS’ earlier insistence that there would be no repeat of 2020 — the realities on the ground forced an about-face. Although you won’t get three extra months this year, the IRS has extended the deadline both to file and pay your 2020 taxes by one month to May 17, 2021.

You don’t need to do anything or file any paperwork and the extension applies to all taxpayers, including those paying the self-employment tax. As long as you file and pay by May 17, you won’t be hit with any interest or penalties. One important caveat is that the extension does not apply to estimated quarterly tax payments. Those are still due by April 15.

If you need even more time to file your taxes this year, you can apply for a tax extension that will give you until Oct. 15 to file your returns.

Please note that while The IRS has announced that the federal income tax deadline for individuals is May 17, 2021, for the 2020 tax year, state deadlines have not changed. Make sure to confirm your state’s due date before you file.

2. You Can Kick Into an IRA Until Tax Day

Another important date to remember: The deadline for traditional or Roth IRA contributions. If you’ve put off contributing to your individual retirement account all of last year, you haven’t missed the boat. A special provision allows you to make your contribution for the previous year as late as the tax-filing deadline for the current calendar year, which means you can make 2020 contributions to your IRA or Roth IRA through May 17, 2021. If you exceed your contribution limit for the year, you can withdraw the overage amount without incurring a tax penalty as long as you do so by May 17.

Read More: Here’s How to Use Your IRA as a Last-Minute Tax Deduction

3. 11th Hour Changes Slowed the IRS

Feb. 12 is a relatively late start to tax season, which usually begins at the end of January. Congress threw the IRS a last-minute curve ball by changing the tax laws on Dec. 27, 2020, just as the new year was set to begin. The new legislation included a second round of stimulus funding, which forced the IRS to update some programs and protocols. That, in turn, slowed everything down. Then at the start of 2021, Congress passed another massive stimulus package that delivered yet another round of checks —  the biggest ones yet.

Save for Your Future

No one expects you to feel sympathy for the IRS, but do understand that it’s an organization under intense pressure and strict deadlines. If you want to get your refund as quickly as possible, there are a few steps you can take to hurry things along. The IRS asks that everyone filing their 2020 tax returns:

  • File as early as possible
  • File electronically
  • Sign up for direct deposit if they haven’t already
  • Don’t call–visit IRS.gov for the latest news and updates

4. Refund Timelines Vary

The IRS issues nine out of 10 refunds within 21 days, although those who send in paper returns by mail or who aren’t signed up for direct deposit can expect delays. Even some returns that are filed electronically with direct deposit can be delayed for a variety of reasons.

If 21 days pass before you receive your refund, use the IRS’ “Where’s My Refund?” tool to check your status.

As of 2017, the IRS is required to hold onto refunds until at least Feb. 15 for anyone claiming the Earned Income Tax Credit or the Additional Child Tax Credit. So if you’re claiming those credits, your entire refund will be delayed — not just the portion attributable to the tax credits.

This year, the “Where’s My Refund?” tool updated for those who claimed the EITC and ACTC on Feb. 22. Those taxpayers started receiving refunds in the first week of March, provided they filed electronically, have direct deposit, and had their returns accepted with no issues.

Stay Safe: How To Protect Your Tax Refund From Being Stolen

5. Free Tax Help Comes With Income Limits

More than 70% of taxpayers qualify for assistance filing their taxes, according to the IRS.

The limit to qualify for Free File Software, a free tax preparation software, is now $66,000. It’s open for use as of Jan. 15. If your income is above $66,000, you can still qualify for Free File Fillable Forms, which are similar to paper forms except that you can file your tax return online and send it electronically. Both options will not only save you money, but you’re more likely to receive your refund sooner as well.

There is also the IRS’ Volunteer Income Tax Assistance (VITA) program, which is limited to Americans over the age of 50 with incomes no greater than $57,000. A similar program, Tax Counseling for the Elderly (TCE), pairs those who qualify with professional tax help.

If you don’t qualify for any of those IRS programs, you’re still not out of luck. You can take advantage of many other cheap and free tax filing software and services.

6. Your Tax Bracket Might Have Changed

There are still seven tax brackets and the rates haven’t changed over last year. Every year, however, the IRS adjusts the income requirements for each tax bracket to compensate for inflation. Here are the updated brackets and rates for tax year 2020, which you’ll file by May 17, 2021.

Single Filers
Income Tax Rate
Not over $9,875 10% of the taxable income
Over $9,876 but not over $40,125 $987.50 plus 12% of the excess over $9,875
Over $40,126 but not over $85,525 $4,617.50 plus 22% of the excess over $40,125
Over $85,526 but not over $163,300 $14,605.50 plus 24% of the excess over $85,525
Over $163,301 but not over $207,350 $33,271.50 plus 32% of the excess over $163,300
Over $207,351 but not over $518,400 $47,367.50 plus 35% of the excess over $207,350
Over $518,401 $156,235 plus 37% of the excess over $518,400
Married Filing Jointly
Income Tax Rate
Not over $19,750 10% of the taxable income
Over $19,751 but not over $80,250 $1,975 plus 12% of the excess over $19,750
Over $80,251 but not over $171,050 $9,235 plus 22% of the excess over $80,250
Over $171,051 but not over $326,600 $29,211 plus 24% of the excess over $171,050
Over $326,601 but not over $414,700 $66,543 plus 32% of the excess over $326,600
Over $414,701 but not over $622,050 $94,735 plus 35% of the excess over $414,700
Over $622,051 $167,307.50 plus 37% of the excess over $622,050
Married Filing Separately
Income Tax Rate
Not over $9,875 10% of the taxable income
Over $9,876 but not over $40,125 $987.50 plus 12% of the excess over $9,875
Over $40,126 but not over $85,525 $4,617.50 plus 22% of the excess over $40,125
Over $85,526 but not over $163,300 $14,605.50 plus 24% of the excess over $85,525
Over $163,301 but not over $207,350 $33,271.50 plus 32% of the excess over $163,300
Over $207,351 but not over $311,025 $47,367.50 plus 35% of the excess over $207,350
Over $311,026 $83,653.75 plus 37% of the excess over $311,025

7. You Might be Eligible For a Rebate

There were two rounds of stimulus payments made to the vast majority of Americans in tax year 2020. If you didn’t receive your first or second Economic Impact Payment (EIP) or didn’t receive them in full, you might be eligible for the Recovery Rebate Credit, which allows you to claim the rest at tax time. If you claim this credit on your 2020 tax return, you’ll receive the amount you’re owed either as an addition to your refund or as a credit to your tax bill. Any money you received in EIP funds does not count toward your income and is not taxable. Keep in mind, however, that unemployment assistance is taxable, including the enhanced unemployment that was granted during the early outbreak under the CARES Act.

Andrew Lisa contributed to the reporting for this article.

Last updated: April 22, 2021

About the Author

Andrew Lisa has been writing professionally since 2001. An award-winning writer, Andrew was formerly one of the youngest nationally distributed columnists for the largest newspaper syndicate in the country, the Gannett News Service. He worked as the business section editor for amNewYork, the most widely distributed newspaper in Manhattan, and worked as a copy editor for TheStreet.com, a financial publication in the heart of Wall Street's investment community in New York City.

Untitled design (1)
Close popup The GBR Closer icon

Sending you timely financial stories that you can bank on.

Sign up for our daily newsletter for the latest financial news and trending topics.

Loading...
Please enter an email.
Please enter a valid email address.
There was an unknown error. Please try again later.

For our full Privacy Policy, click here.