If you are a California resident, here are 5 important updates that could impact your 2020 tax return:
#1: You Have an Extra Month to File Your Taxes
If you haven’t filed your taxes yet, you have an extra month to meet the deadline. On March 17th, the IRS announced that the federal income tax filing due date for individuals for the 2020 tax year was extended from April 15th to May 17th, 2021.
#2: You Have an Extra Month to Make IRA Contributions
If you have been thinking about making an IRA contribution, you now have an extra month to make it. On March 29th, the IRS announced that individuals have until May 17th, 2021 to meet certain deadlines that would normally fall on April 15th, such as making IRA contributions. See the announcement from the IRS aquí.
#3: You Can Only Claim the Golden State Stimulus by Filing Your Taxes
The Golden State Stimulus can put an extra $600 – $1,200 in your pocket if you are eligible to claim it but you must file your 2020 California tax return to claim the payment. If you are a California resident who earned less than $30,000 in 2020, there is a good chance you are eligible to claim it. This means you must file your taxes even if you don’t have a filing requirement. Wondering if you are eligible? See our Guide to the Golden State Stimulus blog post.
#4: NEW IRS Exclusion of $10,200 of Unemployment Compensation
The American Rescue Plan enacted on March 11, 2021, excludes up to $10,200 of unemployment compensation paid in 2020 from being calculated as income on your 2020 tax return. This means that you don’t have to pay tax on unemployment compensation of up to $10,200. If you filed your tax return before March 11th and paid tax on the first $10,200 of unemployment income, the IRS will automatically reconfigure your federal tax return and send you the money you are owed. See the announcement from the IRS aquí.
#5: ITIN Filers Can Now Claim the CalEITC
If you file with an individual taxpayer identification number (ITIN) and you earned less than $30,000 in 2020, the new CalEITC expansion allows you to claim it if you would otherwise be eligible for it. Haga clic aquí to read our announcement from earlier this year.
How to File Your Taxes for FREE
Ready to file your taxes? If you earned less than $60,000 in 2020, OC Free Tax Prep can help you file for FREE with its new Virtual Tax Prep Service. If you earned over $60,000 and have a simple return or you want to file online now for the quickest processing times, you can also file for free at MyFreeTaxes.com.