Tax Day Monday: Reasons to File Income Tax Return Now
While some individuals are still procrastinating on their 2020 income tax return, some also want to know other details because filing before the Monday, May 17 deadline could put money into their pocket.
Filing income tax returns on time can help taxpayers to get the correct amount of their advance child tax credit. Aside from that, they can also get a plus-up payment if the Internal Revenue Service or the IRS underestimated the amount of their third stimulus check.
According to CNET, the IRS mentioned that for them to determine how much money they will receive in 2021, the tax agency needs the individuals' 2020 tax information. There are also reasons why filing a tax return as soon as possible could benefit taxpayers and how extending it could affect them. In addition, if the 2020 tax return is already filed but did no refund was received, there's an option to track it.
Another thing to know is that if one received unemployment benefits in 2020, they might be eligible or entitled to a tax break. Individuals might also be curious as to why the IRS letter on their third stimulus payment is important, how their tax return could give you up to $50,000 in credits and benefits, and how they can determine if the IRS is holding a tax refund that they need to claim by May 17.
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Advance child tax credit
The first payment as part of the expanded child tax credit is expected to go out in July. Eligible individuals might receive up to $3,600 over seven payments if they and their family qualify. The IRS determines how much money you'll actually get by knowing the adjusted gross income.
It is why it is important to file your 2020 taxes by May 17. If not, the payment might be smaller than you are eligible for, USA Today reported.
Plus-up stimulus payment calculation
If an individual already received his or her third stimulus check, they may be due a plus-up payment, too. But it is only possible if the IRS has the individuals' 2020 tax return. If the IRS based their payment on their 2019 tax return, but the 2020 federal tax return shows they qualify for more money for that third payment, the IRS will send the difference as a separate plus-up.
Stimulus payments' missing money recovery
Federal tax returns this year is also a way to recover any money the IRS owes you from the first two stimulus checks. Either not getting a payment or getting less than they were eligible to receive, they can claim that money on their federal tax forms as a rebate credit when they file this year.
It is the same for nonfilers, too. If they wait to file their taxes closer to a later due date while waiting to receive their money, it will be bundled into their tax return.
Third stimulus check
The IRS uses information on the 2020 tax return. If the agency has it, it will be used to determine the amount you'd get in your third stimulus check. The IRS looks at the AGI, or adjusted gross income, on their 2020 form in helping to figure out their payment by using a new stimulus check formula.
If individuals need more time beyond May 17, they can file a tax extension, which will give them until October 15 in completing and sending their paperwork to the IRS, Forbes reported.
According to the Association of International Certified Professional Accountants, this year, 37 states have shifted their deadlines to May 17.
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WATCH: The tax filing deadline is Monday, May 17 FROM-
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