Tax Season Does NOT Have To Be A Bear.
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:
- Forms W-2 from employers
- Forms 1099 from banks and other payers
- Other income documents and records of virtual currency transactions.
- Include your Notice 1444 Your Economic Tax Payment with your tax records if you received an Economic Impact Payment.
- Notify the IRS if your<a href="https://www.irs.gov/faqs/irs-procedures/address-changes" > address change and notify the Social Security Administration of a legal name change.
Remember, most income is taxable. This includes:
- unemployment income,
- refund interest,
- income from the gig economy, and
- virtual currency.
2. Recovery Rebate Credit
You 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:
- You didn’t receive an Economic Impact Payment, or
- Your Economic Impact Payment was less than $1,200 ($2,400 if married filing jointly for 2019 or 2018) plus $500 for each qualifying child you had in 2020.
- For additional information about the Economic Impact Payment, visit the Economic Impact Payment Information Center.
3. Make Sure You Have Withheld Enough
Use 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 Allowance
New 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.