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Employee Tax Reminders for 2021

Employee Tax Reminders for 2021

After a year of deferred deadlines, employment law changes, and workplace adjustments, employees have had a lot to keep track of both inside and outside of the office. With an extension to the federal tax return deadline and other changes, what should employees know this tax season?

 

When is the New Federal Tax Return Deadline in 2021?

The Internal Revenue Service (IRS) and US Department of Treasury announced that the deadline for federal income tax filing was extended from April 15, 2021 to May 17, 2021. The extension is automatic, so individuals who need to take advantage of the extra time don’t have to do anything to apply or qualify for it. 

According to the IRS, “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.” The reason for the extension is to give taxpayers extra time after an unprecedented, stressful year due to COVID-19.

 

When is the New Federal Tax Return Deadline in 2021?

The Internal Revenue Service (IRS) and U.S. Department of Treasury announced that the deadline for federal income tax filing was extended from April 15, 2021 to May 17, 2021. The extension is automatic, so individuals who need to take advantage of the extra time don’t have to do anything to apply or qualify for it.

Similar to last year, the IRS also announced an extension on health savings account contributions for 2020, which coincides with the new May 17 tax return deadline. 

For taxpayers, this means more opportunities to take advantage of tax savings when preparing for healthcare costs. For employers, the extension offers an excellent opportunity to remind employees about the benefits that HSAs offer to workers—including investing their HSA funds.

 

Other Reminders This Tax Season

With vaccination efforts in full swing, the outlook is a little brighter this year compared to last tax season. However, employees are still juggling personal responsibilities at home, staying healthy, and remote working situations, making it easy for tax responsibilities to move to the backburner. Here are some additional reminders for employees this tax year:

  1. PPE is Tax-Deductible. The IRS announced that purchases of personal protective equipment (PPE) to help mitigate the spread of COVID-19 are tax-deductible as long as the expenses exceed 7.5 percent of the taxpayer’s adjusted gross income. PPE includes face masks, sanitizing wipes, and hand sanitizerwhich are all being classified as medical care items by the IRSpurchased for the individual taxpayer, their spouse, and their dependent(s). These items are also eligible for reimbursement under FSAs, HSAs, HRAs, and Archer MSAs, according to the IRS
  2. Economic Impact Payments are Not Taxed. The American Rescue Plan Act of 2021 (ARPA), which President Biden signed into law on Thursday, March 11, included another round of direct stimulus payments to qualifying Americans. This time around, payments can total up to $1,400 per person for families earning less than $160,000 per year and individuals earning less than $80,000 per year. It’s important for employees to keep in mind that the direct stimulus payments are not taxed.
  3. Extension for Winter Storm Victims in Texas, Oklahoma, and Louisiana. The IRS announced that the deadline to file tax returns and make tax payments is extended for victims of the February winter storms in Texas, Oklahoma, and Louisiana. According to the IRS, the new deadline is June 15, 2021, and details can be found on the IRS website.

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