here's why:
today, i was in the midst of preparing 2020 taxes with H&R Block Desktop Deluxe (i abandoned turbotax years ago and now TT won't run on W7 anyway), and i was close to being done and nearly ready to e-file, when suddenly HRB wanted to do a Fed update. I said fine, but when that update was done, lo and behold, the amount of taxes i owed dropped precipitously from prior to the update, so I'm going WTF!!!
fortunately, i had just saved PDFs before the update and was able to trace the change down to a substantial decrease in the amount of SSA and private pension plans payments that are taxable.
i called HRB to find out if they knew about the issue and whether it was their error or whether the Feds were in disarray ... turns out the biden irs is in complete disarray, and that's why they extended the filing deadline ... SUBSTANTIVE changes are still pouring in from the IRS to TT & HRB & others ...
As a consequence, LARGE numbers of filers have been rejected due to these changes, but they're the lucky ones because hundreds of thousands (perhaps millions) are going to have to refile amended returns, and TT & HRB are stuck in the middle in total nightmare mode as folks think they are to blame ...
turns out the filing extension to May 17th is because biden's irs is in such disarray, and HRB told me they've heard the extension might even be changed to sometime in June.
BTW, two other recent changes: only unemployment payments greater than $10,200 are taxable and there's a special new deal for 2020 called a "covid disaster" that allows "qualified" individuals (those who were negatively affected by covid, either due to illness or income) to declare up to $100,000 of 2020 pension/IRA payments to be "covid disaster payments" such that taxes of that amount are spread out over 2020,2021 & 2022, with 1/3 of the declared amount taxed in each of those three years, which may or may not be of any help to anyone. the form for that is 8915-E.
At any rate, the HRB lady that helped me echoed my thoughts about waiting until the very last day to file, namely given how F-ed up everything is right now, we both are going to wait until the very last day to file, whatever that day may ultimately be.
We are waiting to the new May 15th deadline and will consider filing an extension to see what else develops over the coming months.
Suits me fine then since I usually wait to file until the very last weekend. I rarely get a refund so I’m in no hurry to hand over my money.
My understanding was that you could borrow from your IRA without paying the tax penalty that is normally in place. I did precisely that! Any addtional intel will be appreciated!
Crap I just did an update to TT and got the 10,200 unemployment deduction. And e-filed and both returns were excepted
.
BKMK
Our accountant told us to wait before taking our IRA Required Minimum Distribution, it was waived last year and might be again.
Even though the fed moved the filing date, many states have not. Here in Wisconsin they just extended theirs a couple weeks back. But in Wisconsin, like many other states, the state taxes are based on the Fed form. Ugh. Glad they extended.
Ping to self
Cannot speak about other states but the New York State (NYS) Department of Revenue has sent a blast email to all registered paid tax preparers that NYS has ‘decoupled’ the Unemployment Income (UI) $10,200 from taxable income. So, on the NYS state tax returns, the entire UI is taxed!
I wonder how many thesauruses were checked to chose ‘decoupled’ as the operative word. So prim, so proper, so Cuomo!
” “qualified” individuals (those who were negatively affected by covid, either due to illness or income) to declare up to $100,000 of 2020 pension/IRA payments to be “covid disaster payments” such that taxes of that amount are spread out over 2020,2021 & 2022, with 1/3 of the declared amount taxed in each of those three years,”
That change was in there about a month ago.
It’s a trap, of course, since the democrats are going to raise taxes and tax the deferred amounts at 2021 and 2020 rates instead of at Trump rates.
Bfl
I am an Enrolled Agent for H&R Block. Our software was updated for the $10,200 unemployment exclusion per spouse in mid March. Another change is that the Marketplace (Obamacare) 1095-A Premium Tax Credit Repayment (form 8962) is being excluded.
Texas, Louisiana, and Oklahoma filing deadline is June 15. Filing deadline for the rest of the US is May 17.
I completed about 25 returns with unemployment before the $10,200 exclusion per spouse was in place. Many of those clients have received the original return refund. A few had a balance due on the original return and now have a refund. I contacted all of the affected clients.
We have been told not to amend the affected returns. The IRS will make the adjustment starting in May. They will first adjust Single/Head of Household and then Married Filing Joint returns. For the extra refund, not sure if they IRS will make a check or direct deposit it if the original refund was direct deposited.
BKMK
bmp
I ran yesterday’s update - it made a huge difference. Looks like I’ll be filing an amended return this year.