Here are five things to keep in mind this tax season:
1. The tax filing season is February 12th, 2021 through April 15th, 2021
The Internal Revenue Service announced that the nation’s tax season will start on Friday, February 12, 2021, when the tax agency will begin accepting and processing 2020 tax year returns.
The February 12 start date for individual tax return filers allows the IRS time to do additional programming and testing of IRS systems following the December 27 tax law changes that provided a second round of Economic Impact Payments and other benefits.
Start collecting your tax documents and preparing your tax return today!
2. Many families can file for free using IRS Free File
The IRS Free File Program is a partnership with tax filing software leaders who provide their brand-name products for free. There are two ways to file your return online for free:
- Traditional IRS Free File provides free online tax preparation and filing options on IRS partner sites. Only taxpayers whose adjusted gross income (or AGI) is $72,000 or less qualify for any IRS Free File partner offers.
- Free File Fillable Forms are electronic federal tax forms you can fill out and file online for free. If you choose this option, you should know how to prepare your own tax return. It is the only IRS Free File option available for taxpayers whose income (AGI) is greater than $72,000.
3. Eligible people who didn’t receive stimulus payments can claim them with the Recover Rebate Credit
Economic Impact Payments (EIP) are referred to as the Recovery Rebate Credit (RRC) on Form 1040 or Form 1040-SR. You may be eligible to claim your EIP through the RRC if you are a recent college graduate, were claimed as a dependent on a 2019 tax return but will file independently on your 2020 tax return, are incarcerated or were recently incarcerated, or missed the Nov. 21 deadline to use the non-tax filer tool to claim your stimulus check.
4. You can deduct up to $300 in charitable donations without itemizing
The Coronavirus Aid, Relief and Economic Security (CARES) Act, enacted last spring, includes several temporary tax changes helping charities, including the special $300 deduction designed especially for people who choose to take the standard deduction, rather than itemizing their deductions.
Under this new change, individual taxpayers can claim an “above-the-line” deduction of up to $300 for cash donations made to charity during 2020. This means the deduction lowers both adjusted gross income and taxable income – translating into tax savings for those making donations to qualifying tax-exempt organizations.
5. 2019 incomes can be used to determine your Earned Income Tax Credit
The Earned Income Tax Credit (EITC) helps low- to moderate-income workers and families get a tax break. If you qualify, you can use the credit to reduce the taxes you owe – and maybe increase your refund.
You may claim the EITC if your income is low- to moderate. The amount of your credit may change if you have children, dependents, are disabled or meet other criteria.
If your earned income was higher in 2019 than in 2020, you can use the 2019 amount to figure your EITC for 2020.