Updated on Tuesday December 1, 2020: The 2021 tax season is just arounds the corner, and even though we don’t have all the details, taxpayers will be able to begin reporting on their 2020 income in late January. This gives us 2 months to sort out the paperwork and ensure the maximum refund.
It’s very likely that the upcoming tax season will be different for many families. The COVID-19 pandemic has caused a havoc in the economy, and our personal lives. New twists will include reporting the advanced tax credits ($1,200 for individuals, and $2,400 for married couples), or reporting unemployment benefits (Form 1099-G).
To make filing taxes easier in 2021, the IRS brings focus to the following activities:
- Gather your records – set up a system of record keeping, and review and file the tax documents as they come. Even if you keep them mixed up all together, develop a routine to go over them once a month, as it will simplify the preparation process to file taxes. It can also help capture all the expenditures. Another benefit of the ongoing record keeping is that it allows ample time to update any information i.e. address or name change.
- Check you Individual Tax Identification Number (ITIN) – make sure it isn’t expired.
- Make sure you have withheld enough tax – it is getting late to make significant changes to how much has been withheld in taxes this year, but reviewing your withholdings can shed a light as to what to expect when you file the returns. Life changes such as getting married or divorced, having a baby, can impact of how much you will get taxed. The IRS created the Tax Withholding Estimator to help determine adequate amount of withholding. You can adjust the withholdings by submitting an updated Form W-4 to your employer, or making an additional tax payment.
Remember that at minimum, you should have the following information available when filing the tax returns:
- Social Security number for you, your spouse, and any dependents you claim.
- Birth dates for all the individual listed on the tax return: you, your spouse and dependents.
- Wages and earnings – typically reported on Form W-2 or 1099-MISC.
- Copy of prior year’s tax returns – federal and state – if available.
- Bank account details if you chose a direct deposit for the refund.
- Health Insurance statement – Form 1095-A.
COVID-19 has impacted the business hours and the IRS offices are no different. If you require help with your taxes, check with your local IRS office their availability. It is also possible, the hours may be reduced, forcing longer wait time for assistance. Trying to file your tax return as quickly as possible gives you ample time to get help and meet the deadlines. It is also likely that individual tax help will happen virtually. This may also apply to the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. Check with them what medium they will use and get set up timely.
It is a good time to get familiar with the IRS Interactive Tax Assistant (ITA). It requires a little bit more effort from you, but it is designed to answer the most common tax questions. Even if you have an appointment set up to get help with your taxes, it would be beneficial to try the ITA as it may give an idea of what to expect from that meeting and better prepare for it by gathering all the required documents, and have answers for the potential questions.