Steps to take NOW to make tax filing easier in 2021.
1. Gather Your Tax Records
Have your records organized to make preparing a tax return easier. It may also help you discover potentially overlooked deductions or credits.Include in your tax records:
Remember, most income is taxable. This includes:
2. Recovery Rebate CreditYou may be able to claim the Recovery Rebate Credit on your Tax Year 2020 Federal income tax return if you met the eligibility criteria in 2020 and:
3. Make Sure You Have Withheld EnoughUse the Tax Withholding Estimator to help you determine the right amount of tax to have withheld from your paycheck. This tool on IRS.gov will help determine if you need to adjust your withholding and submit a new Form W-4 to your employer. Consider estimated tax payments. If you receive a substantial amount of non-wage income like self-employment income, investment income, taxable Social Security benefits and in some instances, pension and annuity income you should make quarterly estimated tax payments, with the last payment for 2020 due on Jan. 15, 2021.
4. New Charitable Refund AllowanceNew this year, taxpayers who don't itemize deductions can take a charitable deduction of up to $300 for cash contributions made in 2020 to qualifying organizations.
5. Refund Timing Although the IRS issues most refunds in less than 21 days, the IRS cautions taxpayers not to rely on receiving a refund by a certain date, especially when making major purchases or paying bills. Some returns may require additional review and may take longer.