Steps taxpayers can take now to make tax filing easier in 2021
As the year 2020 departs after December 31, the new year will be entered with a checklist by the IRS for us to go over for the upcoming tax season. What are steps taxpayers can take now to make tax filing a breeze in 2021?
Taxpayers should gather Forms W-2, Wage and Tax Statement, Forms 1099-MISC, Miscellaneous Income, and other income documents to help determine eligibility for deductions or credits. Also, a Notice 1444, Economic Impact Payment statement, form is to calculate any Recovery Rebate Credit they may be eligible for on their 2020 Federal income tax return.
Most income is taxable, including unemployment compensation, refund interest and income from the gig economy and virtual currencies.
Taxpayers with an Individual Taxpayer Identification Number (ITIN) should ensure it hasn't expired before they file their 2020 federal tax return. If it has, the IRS recommends they submit a Form W-7, Application for IRS Individual Taxpayer Identification Number, now to renew their ITIN. Taxpayers who fail to renew an ITIN before filing a tax return next year could face a delayed refund and may be ineligible for certain tax credits.
Purchase a durable and trust-worthy tax preparation software such as Intuit Turbo Tax, Drake, or Free Tax USA.
Contact a Tax Accountant to assist with tax preparation and special advisement.
To determine and calculate the tax withholding taxpayers can use the Tax Withholding Estimator on IRS.gov to help determine the right amount of tax to have withheld from their paychecks. If they need to adjust their withholding for the rest of the year time is running out, they should submit a new Form W-4, Employee's Withholding Certificate, to their employer as soon as possible.
Taxpayers who received non-wage income like self-employment income, investment income, taxable Social Security benefits and in some instances, pension and annuity income, may have to make estimated tax payments. Payment options can be found at IRS.gov/payments.
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