2020 Tax Filing Extension

Individuals and Families Filing 1040 Tax Returns for 2020 – The deadline for these tax returns to be filed has been extended for both Federal Tax Returns and for the State of Kansas. Estimated tax payments are still due on April 15. In general, quarterly estimated tax payments are made by people whose income isn’t subject to income tax withholding, including self-employment income, interest, dividends, alimony, or rental income.

2021 American Rescue Plan Tax Changes 

The recently enacted American Rescue Plan brought with it several changes that will affect taxpayers. Here are a few highlights:

Individual Taxpayers

Economic Impact Payments – A third round of payments of up to $1,400 for individuals or $2,800 for married couples, plus $1,400 for each dependent. Unlike previous economic income payments, this round includes all dependents rather than being limited to qualifying children under 17. Payments begin to phase out above adjusted gross incomes of $75,000 for individuals and $150,000 for married couples. For more information, see this IRS article.

Increased Earned Income Credit – For eligible taxpayers without children, the Earned Income Tax Credit was increased from $543 to $1,502.

Expanded Child Tax Credit – There are also several changes to the Child Tax Credit for 2021. 

  • The credit amount has been increased to $3,000 for children under age 18 and $3,600 for children under age 6 as of December 31, 2021 (previously, this credit was $2,000 and was limited to children under 17). The credit remains $500 for dependents aged 18-24 who are full-time students.
  • Additionally, the Child Tax Credit is now fully refundable.
  • Taxpayers will also be able to receive the credit through advance payments made from July 1 to December 31, 2021 rather than waiting to file 2021 taxes. 

Increased Child Care Tax Credit – For the 2021 tax year, the Child Care Tax Credit was made refundable and was temporarily increased to $4,000 for one qualifying individual and $8,000 for two or more. It was also expanded to allow more people to claim the full credit, beginning to phase out after $125,000 of income.

Unemployment Tax Exemption – The first $10,200 of unemployment income received in 2020 is now exempt from federal taxes. This exemption applies retroactively for individual taxpayers earning under $150,000.

Small Businesses

Employee Retention Credit Extension – For small businesses, the Employee Retention Credit has been extended through December 2021. This allows businesses that have seen revenue declines or been closed due to COVID to offset payroll tax liabilities up to $7,000 per employee per quarter. 

Paid Leave Credit Program Extension – The American Rescue Plan also extended Paid Leave Credits through September 2021 for small and midsize business who offer employees paid leave for illness, quarantine, or caregiving. This credit allows employers to take a dollar-for-dollar tax credit for wages up to $5,000.

For more information on the American Rescue Plan Act, see The White House website.