2021 has been a landmark year for tax law, with many late-breaking changes designed to help vulnerable and working families redeem more benefits. These updates are coming in quickly, and our staff and VITA volunteers are doing our best to keep up. We are compiling answers to frequently asked questions and other helpful resources for taxpayers here.
And remember, our VITA teams are available to work with community members, 1-on-1, on returns for free. To start working with them and hear their recommendations for your situation, visit GetYourRefund.org/uwtsa and select ‘File with the help of an expert.’ Once you upload IRS-required IDs and answer questions about your tax situation, you will be put in touch with local tax experts from United Way. These VITA volunteers can help anyone in households making $66,000 or less navigate the system to get their refunds, stimulus checks, and more.
When should I file my taxes?
The IRS has extended the filing deadline to May 17, 2021 this year, but we don’t recommend waiting until the last minute. Filing sooner rather than later is a smart move for almost everyone, especially people missing a 1st or 2nd stimulus check and anyone with a major life change (marriage, divorce, death, had a child in 2020, etc.). Changes related to preparing returns with unemployment income and marketplace insurance are now live in tax software systems too, meaning that these returns can now be prepared accurately and without amendments. As of March 30th, the IRS has also announced their plan to send payments to people receiving federal benefits during the month of April - find more information in this article from Accounting Today.
I have not received at least one of my stimulus payments. What is my next step?
If you are looking for the status of your third payment, we recommend checking the IRS ‘Get My Payment’ website. Note that the IRS started distributing third payments to individuals with social security, disability, and railroad benefits income at the beginning of April, and people receiving VA benefits should receive their payments in mid to late April. If you are missing your third payment and receive these benefits, you may want to wait a few weeks to see if your payment comes through before filing.
If you are missing your first or second payments, you may be eligible to claim the Recovery Rebate Credit on your 2020 taxes and we recommend filing your taxes to recoup them. Our VITA team can help you file through Get Your Refund.
How can people who are unhoused or currently experiencing homelessness receive their Economic Impact Payments?
In addition the resources and recommendations listed above, find additional information in this guide from our partners, Tucson Pima Collaboration to End Homelessness - Don't Miss Out: A Guide to 2021 Economic Impact Payments for People Experiencing Homelessness
I filed my taxes but still haven’t received my federal refund.
Use the IRS ‘Where’s My Refund?’ page to check the status of your federal refund. To check, you will need your social security number or ITIN, your filing status (ex. single, married filing jointly, etc.), and your exact refund amount – the amount of money that your tax preparer or tax software told you to expect.
How can I get copies of my tax returns from previous years?
If you are looking for a past Federal return, you can also obtain prior year tax return transcripts on the IRS ‘Get Transcript’ webpage. If you need a state return, you will need to contact your state’s Department of Revenue. In Arizona, the AZ DOR has a designated page for requesting copies of tax documents.
What is the Recovery Rebate Credit?
Technically, the first two rounds of stimulus checks were advance payments of the Recovery Rebate Credit on your 2020 taxes. If you didn’t receive your payments yet, you can claim the credit on your taxes and receive it now. Learn more about the credit on the IRS 2020 Recovery Rebate Credit page
How will unemployment income affect my taxes this year?
If you made less than $150,000 last year and received unemployment compensation, you can exclude up to $10,200 of that unemployment income and not pay taxes on it. Learn more about the details of unemployment and your federal return on the IRS website: New Exclusion of up to $10,200 of Unemployment Compensation
If you filed your taxes before the American Rescue Plan Act was signed (March 11th), the IRS says you will not need to amend your return – they will adjust for you. The IRS expects that refunds from these recalculations will begin to be sent out in May and continue throughout the summer (read their full announcement here).
What is the Premium Tax Credit, and how might it impact my taxes this year?
According to the IRS, the premium tax credit – also known as PTC – is a refundable credit that helps eligible individuals and families cover the premiums for their health insurance purchased through the Health Insurance Marketplace.
The American Rescue Plan Act not only reduces the cost of enrollment in these plans, but includes language to protect people with fluctuating incomes continue affording their coverage. Specifically, many people will no longer have repayment requirements on their coverage. To reap these benefits, consumers may need to go to healthcare.gov and update their application for the changes to take effect.
Learn more about the changes and steps to do if they apply for you from NBC News - Covid rescue package offers help for health insurance. Here's how to get the most benefit
What are the Child Tax Credit changes?
A change to the Child Tax Credit means that most families with children will receive up to $300 in monthly payments, starting this summer. Learn more about how this change to the Child Tax Credit came to be in this podcast from The Daily at The New York Times – A Safety Net for American Children.
Filing your taxes now is likely the best way to set your family up for receiving it, if you qualify. Learn more from C-Net Personal Finance -- $3,600 Child Tax Credit for 2021 FAQ: 5 things you should know