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We're 1 month out from the federal tax deadline—here are 4 things to know before you file

Federal taxes are due on May 17. Get ready to file your return by making sure you're up-to-date with the latest information.

Granger Wootz | Tetra images | Getty Images

Federal taxes are due on May 17, 2021. The Internal Revenue Service extended the deadline as part of its response to the coronavirus pandemic, both to give Americans more time to file their paperwork and the agency a chance to process all those stimulus checks.

As many as 35 states updated their tax deadline accordingly, so many Americans can now benefit from extra time. In a survey by exchange services company IPX 1031 of 1,000 consumers, one-third (33%) admitted to waiting until the last minute to do their taxes, and another third (32%) weren't aware that the deadline had been extended.

With all the changes, Select rounded up the latest information you should know about as we get closer to Tax Day:

What to know about doing your 2020 taxes

Tax deadlines in 2021

The new federal tax deadline is May 17. The majority of states also extended their tax deadlines to May 17, in accordance with the updated IRS federal tax deadline.

The deadline for quarterly estimated tax payments, however, remains April 15, so freelancers should have already filed.

Those who haven't filed previous years' taxes also have until May 17, to file returns for 2017, 2018 or 2019. The IRS estimates that as many as 1.3 million people haven't claimed their 2017 refund. (Learn more on how to claim yours.)

If haven't yet invested in your IRA, you have until the May 17 deadline to make 2020 contributions.

Best tax filing software

There are several free tax filing options for people who submit a simple return, which is the most basic tax form for W-2 filers who have straightforward taxes.

Select's picks for the best tax software programs offer users the opportunity to file a simple tax return for free. The only exception is TaxAct, which charges a fee per state return; filing a simple federal tax return is free (costs may vary depending on the plan selected).

Here are our top picks:

* (according to TurboTax, about 37% of taxpayers qualify for this edition and it's available for Form 1040 + limited credits only; Click here for TurboTax offer details and disclosures.)

For more complex returns, such as for small business owners or anyone with multiple income streams (including investments and/or 1099 income), our top picks offer paid services to help you file fast and accurately.

The IRS recommends you file electronically for the safest and fastest return.

Learn more about tax filing services:

Unemployment benefits

Over 40 million people filed for unemployment in 2020, but not everybody knows that unemployment benefits are considered taxable income.

While unemployment insurance isn't subject to Social Security and Medicare withholdings, these benefits are taxed according to the recipient's tax bracket.

The amount you will have to pay varies widely depending on your household income and filing status, not to mention where you live. Everyone will owe federal income tax on unemployment, but six states exempt the benefit from what's considered taxable income. Another handful don't have income tax at all.

Thanks to changes introduced as part of the American Rescue Plan Act, you may be eligible for a small break, however: The legislation includes a provision that waives taxes on the first $10,200 of unemployment benefits for individual taxpayers, and double that ($20,400) if you're married filing jointly (and both of you received unemployment benefits in 2020). (Read more about who qualifies and how to claim your waiver.)

Tax credits and deductions

The federal government's coronavirus relief packages — from last March's CARES Act through the latest American Rescue Plan — include modified tax credits to help give families more money on top of stimulus checks and federal student loan relief.

The IRS has created a specific tax credit — the Recovery Rebate Credit — for eligible taxpayers who didn't get the stimulus money that was owed to them. You'll find this rebate on line 30 of your 2020 tax return.

Additionally, taxpayers who qualify for the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) can benefit from "lookback" provisions this year that allow them to use 2019's income as the basis for their tax credit eligibility. This benefits earners who made more in 2019 and suffered a loss in income in 2020, as the amount of the tax credit is calculated as a percentage of your household income.

Learn more about each of these credits and who qualifies for the lookback provision here.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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