February 10, 2021
Tagged As: Personal
Friday, February 12th marks the beginning of the tax return filing season which will continue until April 15th. 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.
Over 150 million individual tax returns are expected to be filed in 2021. The IRS expects 4 out of 5 tax returns will be prepared electronically using tax software and anticipates issuing more than 90% of refunds in fewer than 21 days. To receive your refund in the fastest and safest way, the IRS recommends choosing e-file and direct deposit for refunds.
Here are a few tax preparation tips:
- To help prevent identity theft the IRS recommends filing earlier in the tax season.
- Visit the IRS website (irs.gov). The IRS website is full of valuable information.
- Gather all important tax documents using documents collected last year as a guide. A few important documents include:
- 1099s (miscellaneous income, interest, dividends, certain government payments, distributions from pensions, annuities, retirements, etc.)
- Other income documents and records of virtual currency transactions
- Notice 1444, Your Economic Impact Payment
- Review your return for errors. Check spelling on names, social security numbers, math, and inputs on line items.
- Sign and date your return (along with your spouse).
- Consult your tax professional for help.
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 IRS website.
All taxpayers should continue to watch out for identity theft scams by people pretending to be IRS representatives through email or phone communications. Remember, the IRS will never:
- Demand immediate payment without first having mailed the taxpayer an explanation of additional tax due.
- Demand that the taxpayer pay taxes without giving them the opportunity to question or appeal the amount said to be owed.
- Require a specific payment method to be used to pay tax owed.
- Ask for credit or debit card numbers.
- Threaten to bring in local police or other law enforcement groups to have the taxpayer arrested for not paying.
Finally, don’t forget about filing your Iowa individual income tax return, which is due April 30th, 2021! Over 90% of Iowans filed their income tax return electronically last year. Iowans can again expect longer wait times for refunds as the Iowa Department of Revenue Director said the agency would double down on fraud prevention efforts that significantly delay the processing of income tax refunds.
This information is provided for informational purposes and is not intended to substitute professional advice.