IRS, Facing Massive Backlog, Delays Tax Deadline
The IRS, facing a backlog of 24 million returns from the 2019 tax year, has postponed the deadline to file federal income taxes until May 17. (It is expected that many states will follow suit.)
The backlog, the Washington Post reports, has kept some Americans from receiving their tax refunds and prevented some workers from receiving their stimulus payments.
That’s because at least 2.4 million of the returns are paper tax returns from the 2019 tax year. The stimulus bill adopted in December 2020 — the one that sent $600 stimulus checks to many Americans — tied eligibility for checks to their 2019 taxes.
The people waiting for previous stimulus payments , if they are eligible, can collect that $600 as part of their 2020 returns, but there’s an additional backlog of 12.4 million returns for the 2020 tax year as well, the Post said.
In addition, some people who have filed their 2020 taxes already may be owed more money, because the American Rescue Plan Act of 2021 contained changes to the tax code — for one, saying that the first $10,200 of unemployment benefits paid in 2020 aren’t taxable.
As many as 40 million Americans received unemployment last year and now either are due a refund or a reduced bill on those benefits, the Seattle Times reported.
At a briefing Thursday, as reported by the New York Times, IRS commissioner Charles Rettig told Congress that “we believe we will be able to automatically issue refunds associated with the $10,2000,” but did not give a timeline for doing so and reiterated that people who have already filed their 2020 taxes should not file an amended return. Small comfort for people who could really use the extra money.
For (Some) Americans, Recovery Is On Its Way
A survey of nearly 3,000 adults by TransUnion finds that 38% of Americans said their household income remains negatively impacted by the pandemic — down from 53% a year ago, Credit Union Times reports.
Fewer people reported having bills or loans in some form of forbearance or accommodation than they did four months ago, the survey found.
TransUnion’s survey didn’t break down respondents by race or gender. If it had, it might have found results consistent with an AP-NORC Center for Public Affairs poll from earlier this month that found Black and Hispanic Americans are much more likely to have experienced pandemic-related job or income losses than white people, and are about twice as likely to have had a close friend or relative who has died of COVID-19.
“We find that systemic racism plays a huge role in this process,” Rashawn Ray, a fellow in governance studies at the Brookings Institute, told the Associated Press. “I think what we’re going to see once the dust settles is that the racial wealth gap has actually increased.” Ray co-authored a recent report on racial disparities and the pandemic in Detroit.
Seattle ‘Fund for Inclusive Recovery’ Will Direct Millions Towards Communities of Color
A new effort aims to raise $50 million to distribute to communities of color in Seattle that have been disproportionately impacted by the coronavirus pandemic, the Seattle Post-Intelligencer reports.
The ‘Fund for Inclusive Recovery’ is led by the Seattle Foundation and has received investments from partner funders including Deloitte, the Seattle Mariners, Tableau Foundation and Umpqua Bank, among other foundations and individuals.
The funds will be given to groups who work in housing, mental health, criminal justice and other sectors. A community advisory group made up of Black and Indigenous people of color will help “lay out the priorities” for the fund, the Post-Intelligencer said.
This article is part of The Bottom Line, a series exploring scalable solutions for problems related to affordability, inclusive economic growth and access to capital. Click here to subscribe to our Bottom Line newsletter. The Bottom Line is made possible with support from Citi.