2021 Taxes: What To Expect
By Todd Whalen - January 28, 2021
If you’re one of the millions hoping to get an early jump on taxes this year – and a fast refund – you may be out of luck. On January 15, the Internal Revenue Service (IRS) announced they are delaying the start of income tax season until February 12, roughly three weeks later than usual.
The late start is due in part to the latest stimulus rollout and tax code changes that went into effect in late December.
Every year, new tax rules go into effect that taxpayers need to be aware of. And following such a historically unique and challenging year as 2020, there is a lot of important information you need to know. Here’s what to expect and smart tips to help you prepare to file your 2021 taxes.
2021 Tax Information and Tips
File Early and Electronically
To speed up the tax refund process, the IRS recommends you file your taxes electronically as soon as you have all the tax information you need (W2, 1099, mortgage and student loan interest, etc.). Generally, you can expect to receive your income tax refund in as little as two weeks, but it may take longer during peak filing season beginning in late March.Advanced Tax Solutions can prepare your taxes now so they’re ready for transmission to the IRS starting February 12.
Catch Up on Back Taxes
If you didn’t receive stimulus relief in 2020, or if you believe you didn’t receive as much as you should have, it may be due to back taxes. The amount of relief you received in 2020 is based on your reported income from your 2019 or 2018 taxes. You may be missing money if you have not yet filed taxes for those years.Speak with the tax professionals at Advanced Tax Solutions to discover your options for catching up on back taxes and to find out if you qualify for more relief.
Check Your Eligibility for Recovery Rebate Credit/Economic Impact Payment.
The Recovery Rebate Credit is a tax credit for your 2020 income tax that can potentially boost your tax refund amount or reduce your tax debt. The credit was paid in advance in 2020 or early 2021 as part of the Economic Impact Payments (EIP). According to the IRS, you already received those payments in full if you received EIP payments for the following:
- First stimulus payment of $1,200 ($2,400 if married filing jointly for 2020) plus $500 for each qualifying child you had in 2020; and.
- Second stimulus payment of $600 ($1,200 if married filing jointly for 2020) plus $600 for each qualifying child you had in 2020.
If you did not receive full payments, check your eligibility for Recovery Rebate Credit by completing the Recovery Rebate Credit Worksheet in the Instructions for Form 1040 and Form 1040-SR.
Charitable Deduction Changes
The IRS now allows you to deduct up to $300 in charitable cash contributions. You can even claim the deduction if you file using the standard deduction.The limit does not apply if you itemize your 2020 tax return; you can deduct cash contributions up to 100% of your adjusted gross income. The changes are intended to encourage people to give financial support to charities during the Coronavirus pandemic.
Important News about 2021 Tax Season
The deadline for filing your taxes is Thursday, April 15, 2021. It’s a new year and there are reasons for optimism. The coronavirus vaccine is in circulation and the IRS is increasing the standard deduction to $12,400 for single filers and $24,800 for married couples filing jointly. Income tax brackets are also increased in 2020 to account for inflation.
