Haven’t Filed Your 2020 Tax Return? You May Be Forfeiting a Substantial Refund
Article Highlights:
2020 refunds are in jeopardy
Filing deadline
Lost benefits
Mailing instructions
If you have not yet filed your 2020 federal tax return and have a refund coming, time is running out! The IRS estimates that there are about 940,000 taxpayers who have not filed their 2020 tax returns and that there is over $1 billion dollars of unclaimed refunds available for those taxpayers. If you fall in this category, you need to act quickly because the return must be filed by May 17, 2024 to claim a refund for 2020. Otherwise, the money becomes the property of the U.S. Treasury. The average refund for 2020 is estimated to be $932. It could be more for those who haven’t already received their COVID-era Recovery Rebate Credit.
Taxpayers usually have three years to file and claim tax refunds, and generally means the filing deadline to claim past refunds would be the April tax deadline three years after the original return filing deadline. However, due to the Covid-19 pandemic, the original filing deadline for 2020 returns was postponed a month. Accordingly, the 3-year-deadline for claiming 2020 refunds has been postponed to May 17, 2024.
By failing to file a return, people stand to lose more than a refund of taxes withheld or paid during 2020. Many low- and moderate-income workers may not have claimed the Earned Income Tax Credit (EITC). The EITC helps individuals and families with incomes below certain thresholds, which for unmarried individuals in 2020 were $50,594 for those with three or more children, $47,440 for those with two children, $41,756 for people with one child, and $15,820 for those with no children. For married joint filers, the threshold is $6,250 more for those with three or more children, and $5,890 more for each other category. In addition, parents eligible to claim the refundable portion of the child tax credit will forfeit that benefit if they don’t file a return.
When filing a 2020 return, the law requires that the return be properly addressed, mailed, and postmarked by the May 17th date. It may also be appropriate to obtain a proof of mailing from the Post Office in case the IRS disputes the return being mailed by the deadline. There is no penalty for filing a late return qualifying for a refund.
As a reminder, taxpayers seeking a 2020 refund should know that their checks from the IRS will be held if they have not filed tax returns for 2021 and 2022. In addition, the refund will be applied to any amounts still owed to the IRS, and may be used to offset unpaid child support or past-due federal debts such as student loans.
Don’t forfeit your 2020 refund; contact this office for assistance in bringing your tax filing obligations current.
Want tax & accounting tips and insights?
Sign up for our newsletter.
“Bernard and his team at BR tax group are top notch. This is my first year using them after switching from a different local CPA and I didn't realize how much tax info I've been missing. His communication is great. The additional information he provides to maximize tax savings is something I didn't get from my previous CPA. Thanks Bernard”
Frequently Asked Questions
-
You can prepare your taxes yourself, especially if your business is simple.
But once you have contractors, employees, business loans, equipment purchases, mileage, mixed expenses, or growing revenue, things get more complex. At that point, tax preparation becomes a way to make sure your business is reported correctly, your deductions are handled properly, and your records can support what you file.
-
Send anything that shows what your business earned, spent, bought, paid, borrowed, or changed during the year.
That usually means your income records, bank statements, credit card statements, payroll reports, contractor payments, loan documents, mileage records, and prior-year tax return. Also tell me about anything unusual, such as buying a vehicle, hiring someone, opening a new location, or taking out a business loan.
-
Messy books can slow things down. If expenses are in the wrong categories, transactions are missing, or personal and business spending are mixed together, your tax return may not show the right profit. We may need to clean things up before filing, so your return is accurate and easier to support.
-
Possibly, if it was truly for your business and you have proof.
Still, it is much better to avoid this when you can. A separate business bank account and business credit card make everything cleaner. They save time, reduce confusion, and make your records much easier to defend if anyone ever asks questions.
-
Most small business owners can deduct ordinary business expenses like software, advertising, supplies, insurance, rent, payroll, contractor payments, professional fees, travel, and some vehicle costs.
The question I usually ask is simple. Was this expense clearly for the business? If yes, we can look at how it should be handled. Personal expenses should stay personal.
Our Offices
Georgetown
Austin - Arboretum
Austin Downtown
Let's Get Started
Our services are designed specifically for business start-ups, entrepreneurs and small businesses of all sizes. Let’s start the conversation.
Site managed by http://www.webstrategyboost.com/