With the 2020 tax filing season creeping up on Americans quickly, the IRS is now encouraging taxpayers to start preparing in advance in order to help file on time and accurately for 2021. Taking action weeks in advance can help many tax filers prevent making avoidable mistakes on their taxes and will help ensure that all important tax documents are accounted for before tax filing time.
Optima Tax Relief reviews key items that taxpayers need to consider such as credits, deductions and refunds.
Taxpayers who have received an Economic Impact Payment should also keep Notice 144, Your Economic Impact Payment, with their tax records. Taxpayers could also be eligible to claim a Recovery Rebate Credit when filing their 2020 tax return. If eligible, a taxpayer will have to meet the following:
Taxpayers who did not receive the full amount of their Economic Impact Payment that they were eligible, may be able to claim a Recovery Rebate Credit when they file in 2021.
Taxpayers who receive a federal refund for 2020 may have been paid interest. Refund interest payments are considered taxable and will need to be reported on a federal tax return. In January 2021, some taxpayers can expect that the IRS will send Form 1099-INT to anyone who received interest totaling $10 or more.
The IRS announced that for 2021, taxpayers who don’t itemize deductions may take a charitable deduction of up to $300 for cash contributions made in 2020 to qualifying organizations. .
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