Despite calls from lawmakers and nonprofits to delay the April 15 tax deadline, the Internal Revenue Service so far doesn't see the need. But it's not ready to rule out an extension altogether, either.
"We're looking at extending the filing deadline, but understand that there's a lot of confusion for taxpayers when we do," IRS Commissioner Charles Rettig said at a hearing at the House of Representative’s Appropriations Committee on Tuesday. "Presently, we don't see a need to extend the filing deadline."
This year, the filing season started on February 12, a delayed start compared with previous years, leaving Americans with less time this season to prepare their returns. Lawmakers and other organizations have urged the IRS to extend the deadline because of the late start and the difficulties taxpayers are still facing because of the pandemic.
"We are troubled that this reduced timeline will exacerbate difficulties for many taxpayers who may be unprepared for the amount due with their return and will have no savings to turn to and less time to consider their options," members of the House Committee on Ways and Means wrote in a letter last week."We request that you consider an extension of the tax return filing season with an announcement made as soon as possible to eliminate unnecessary taxpayer and practitioner anxiety."
In 2020, the tax filing deadline was extended to July 15 due to the health and economic challenges caused by the pandemic, but lawmakers say some of those challenges "persist for taxpayers" this year, including taxpayers assistance sites still being closed.
The AARP also called for an extension, noting that many older Americans require assistance with their tax returns but some in-person services are still unavailable. Additionally, this year's returns may be more challenging for some filers when it comes to claiming stimulus payments, the nonprofit said.
"There are also ongoing questions around economic impact payments, and tax forms may be more complex for those who did not receive correct payments in 2020," Bill Sweeney, AARP's senior vice president for government affairs, wrote in a letter to the IRS on Monday. "At the same time, reports indicate the Internal Revenue Service is experiencing overwhelming demand on their phone lines, making it challenging for people to get answers to their questions."
Those who were eligible for a stimulus check but didn't get one or didn't get the full amount can claim this as a Recovery Rebate Credit on their federal tax return. The credit applies to both the first round of $1,200 stimulus checks sent in the spring and the second round of $600 checks sent in January.
Additionally, taxpayers will be allowed to use either their 2019 or 2020 income to determine eligibility for the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC) — whichever year is most beneficial to them. To qualify for the credits, you must have earned income in 2020; unemployment benefits don't qualify.
'Creates a lot of confusion for taxpayers'
Last year, the IRS had to deal with the distribution of two rounds of stimulus checks on top of backlogs and the slow processing of 16 million paper tax returns, according to the National Taxpayer Advocate Erin Collins's 2020 annual report to Congress. As of December 31, 7 million individual tax returns had not been processed, while over 2.3 million business returns remained unprocessed as of November 24 of last year, the report found.
“The challenges created by the COVID-19 pandemic will continue through the 2021 filing season and possibly for months longer, affecting both the IRS and taxpayers,” Collins wrote in her report.
But Rettig said that the tax season started earlier than February 12 for the private sector. Additionally, the more complex filing would be for those who claim child tax credit or the earned income tax credit, but the IRS "did a good job of messaging that," he said.
"Keep in mind [the extension] creates a lot of confusion for taxpayers," he said. "The private sector went into tax season by the second week of January, they're well into it."
The tax filing deadline has been extended until July 15 for victims of the winter storms in Texas. Taxpayers can also request an extension until October 15 for any reason. Extension requests must be filed by April 15.