Tuesday, March 30, 2021


The IRS has clarified the recent extension of the filing, and paying, deadline from April 15 to May 17.

In “IRS extends additional tax deadlines for individuals to May 17”, which explains IRS Notice 2021-21, we are told -

In extending the deadline to file Form 1040 series returns to May 17, the IRS is automatically postponing to the same date the time for individuals to make 2020 contributions to their individual retirement arrangements (IRAs and Roth IRAs), health savings accounts (HSAs), Archer Medical Savings Accounts (Archer MSAs), and Coverdell education savings accounts (Coverdell ESAs).


Saturday, March 27, 2021


IRS Announcement 2021-7 (1) tells us that the cost of personal protective equipment (PPE) for the primary purpose of preventing the spread of COVID-19 is considered amounts paid for medical care under Internal Revenue Code Sec. 213(d). 

So, the purchase of personal protective equipment such as face-masks, hand sanitizer and sanitizing wipes for COVID-19 protection are deductible as medical expenses on Schedule A.  

And, for NJ residents, because these costs are a deductible expense for Schedule A they are also deductible as a medical expense on the NJ-1040. 


Saturday, March 20, 2021


NJ.COM reports “N.J. extends tax deadline to May 17, matching federal change” –

But there will not be an extension for first quarter 2021 individual estimated tax payments, the statement said. Those will still be due on April 15.”

I have not seen anything on the NJ Division of Taxation webpage yet.

As For New York, according to N-21-1

The Commissioner of the New York State Department of Taxation and Finance has extended the due date for personal income tax returns, and related payments, for the 2020 tax year from April 15, 2021 to May 17, 2021.” 

But, as with the IRS – 

“This relief does not apply to estimated tax payments for the 2021 tax year that are due on April 15, 2021. These payments are still due on April 15, 2021.” 

And from the Pennsylvania Department of Revenue

The Department of Revenue today announced the deadline for taxpayers to file their 2020 Pennsylvania personal income tax returns and make final 2020 income tax payments is extended to May 17, 2021.”

And -  

Those who make estimated income tax payments should continue to do so on the same filing schedule that they would normally follow. This includes taxpayers with estimated tax payments due on April 15, 2021.” 

Not from New Jersey, New York or Pennsylvania.  You should check the website of your state tax agency to see if it has extended the filing and paying deadline.


Friday, March 19, 2021


It appears, according to IRS Commissioner Chuck Rettig, that the IRS will automatically process refunds for taxpayers who have already filed their 2020 income tax returns and claimed the full amount of unemployment benefits received as taxable income.  

As I explained in a previous post (click here) - “The American Rescue Plan . . . exempts from federal taxable income up to $10,200 in unemployment benefits received in 2020 if your “household” modified AGI is less than $150,000.” 
Do not file an amended return at this time,” Rettig told a congressional panel on Thursday. “We believe that we will be able to handle this on our own. We believe that we will be able to automatically issue refunds associated with the $10,200.”
Rettig explained that the IRS would soon officially release details for taxpayers about how to proceed.


Thursday, March 18, 2021


The IRS, in IR-2021-59, has announced that “the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021.”
According to the notice -
Individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without penalties and interest, regardless of the amount owed. . . . Penalties, interest and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. Individual taxpayers will automatically avoid interest and penalties on the taxes paid by May 17.”
It also explains –
Individual taxpayers who need additional time to file beyond the May 17 deadline can request a filing extension until Oct. 15 by filing Form 4868.”
This applies only to the federal Form 1040 or 1040-SR.  “This relief does not apply to estimated tax payments that are due on April 15, 2021. These payments are still due on April 15.”
It also does not necessarily apply to the deadline for filing state income tax returns and paying any balance due.  “State filing and payment deadlines vary and are not always the same as the federal filing deadline. The IRS urges taxpayers to check with their state tax agencies for those details.”
I will post here when I hear about any change to New Jersey and New York state return deadlines.


Monday, March 15, 2021


The American Rescue Plan, signed into law last week, exempts from federal taxable income up to $10,200 in unemployment benefits received in 2020 if your “household” modified AGI is less than $150,000. 

This exemption applies to all unemployment received in 2020, and not just the special federal $600 per week extended benefit passed as part of the stimulus package.  It includes “regular” unemployment benefits paid under a traditional state program.

The $10,200 exemption is per spouse on a joint return.  So, if both spouses received unemployment in 2020, they can each exclude up to $10,200.  The $10,200 is “per spouse” – as IRS guidance explains, if one spouse received $20,000 in unemployment and the other received $5,000 the total amount you can exclude is $15,200 ($10,200 + $5,000).

Your “modified” AGI for claiming the exemption is your AGI before subtracting the exclusion of unemployment benefits.  The $150,000 income threshold applies to Single filers, Head of Household filers, and joint filers.  If you are single or a Head of Household you can exclude up to $10,200 if your AGI is $149,999 or less.  If you are married filing a joint return you can exclude up to $10,200 each if your AGI does not exceed $149,999.  The exclusion does not “phase-out” at $150,000.  If your AGI is $149,999 or less you can exclude $10,200 per taxpayer.  If your AGI is $150,000 or more you cannot exclude anything – all of your unemployment is fully taxable.  So, $1.00 in actual income can increase your net taxable income by at least $10,200 or $20,400!  I do not know yet how this $150,000 threshold applies to separate returns filed by a married couple.

The gross amount of unemployment received, as reported on Form 1099-G, is reported on Line 7 of Schedule 1.  The amount of the exclusion is reported as a negative number on Line 8.  Write “UCE” and show the amount of the exclusion claimed in parentheses on the dotted line at Line 8. 

A single filer who received $16,000 in total unemployment would enter $16,000 on Line 7.  If the taxpayer had no other “other income” to report on Line 8 he or she would enter ($10,200) on Line 8.  If these were the only entries on Schedule 1 Part 1 Line 9, carried over to the Form 1040 or 1040-SR, would be $5.800. 

Go here for the official IRS explanation of how to claim the exemption.