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Tax Day 2021: Haven’t done your taxes yet? 12 tips for last-minute filers

Tax Day 2021: Haven't done your taxes yet? 12 tips for last-minute filers

FINANCIAL NEWS

Tax Day 2021: Haven’t done your taxes yet? 12 tips for last-minute filers

2020 taxes: Do you owe taxes on stimulus checks or unemployment?Because of the coronavirus pandemic, 2020 may be a tax year like no other. Here are answers to some of your top questions.Staff video, USA TODAYTax Day is here! It’s down to the wire for some Americans, so be careful not to make sloppy mistakes or you could miss out on a larger refund, owe more in taxes or face an IRS audit.Some of the most common errors that filers make include missing a tax break, providing incorrect bank information or accruing penalties for failing to file on time. Many families should also file a 2020 income tax return to receive cash later this year through the expanded Child Tax Credit. That’s true even if you don’t normally make enough money to need to file a federal income tax return. Some may qualify for additional money by claiming the Recovery Rebate Credit.Tax Day is Monday: Tax Day is Monday: How do I file a tax extension?Did your state extend the deadline for income taxes? Here’s when 2020 taxes are due.To be sure, May 17 isn’t the deadline all across the country. There are some exceptions. Victims of the February winter storms in Texas, Oklahoma and Louisiana have until June 15 to file their 2020 federal returns and pay any tax due.The IRS also extended the federal deadline in parts of Tennessee and Alabama to Aug. 2 for victims of storms. Some individuals in parts of Kentucky that were affected by flooding have until June 30.For those who need to file by Monday, here are some last minute tips:1. File on time. If you can’t, get an extension.It’s important to file on time or get an extension up to Oct. 15 so you don’t get hit with a late filing and/or a late payment fee. But filing an extension when you owe taxes only gives you more time to file, not more time to pay. That means your payment is still due at the tax filing deadline.To file an extension, submit IRS Form 4868 electronically by the deadline. Another option is to print out the form and send it to the IRS address for your state by the deadline. You can also do it for free using any of the Free File software offered by the major tax preparation companies. The rules vary from state to state and each one has its own tax-filing extension rules. Check your state’s tax agency website for more information. But remember, you might not want to file for an extension — especially if you have your paperwork — if you have children and can qualify for the Child Tax Credit where you might start seeing some extra money this summer. 2. A 2020 return is vital for parentsThe scope of the newly revised Child Tax Credit has been expanded significantly to cover children ages 17 and younger, instead of stopping at 16.More important, families will be able to receive cash from the child credit from July through December 2021 as part of a new system. The goal is to help families pay bills now, instead of waiting for money to arrive next year.The expanded credit is worth up to $3,000 per child a year for children ages 6 to 17. The credit offers an extra $600 — providing up to $3,600 — for each child 5 and younger. By filing a tax return, experts say, the IRS will know where to send your payment and how many children you have. The amount was temporarily increased under the American Rescue Plan Act for the tax year 2021. 3. Claim Recovery Rebate Credit if eligibleThe Recovery Rebate Credit is found on Line 30 of the 1040 or 1040-SR. The credit is essential to claim on the 2020 tax return if you didn’t get your stimulus or didn’t get all the money you’re qualified to receive in the first two rounds of stimulus payments.The Recovery Rebate Credit is triggering some stimulus-related mistakes on 2020 income tax returns that have already been filed. The IRS will end up mailing you a letter if you claimed the credit and may be getting a different amount than expected. The mistakes also cause delays in receiving your income tax refund. If possible, dig up accurate stimulus numbers by looking for letters that the IRS sent out earlier, such as IRS Notice 1444 for the first Economic Impact Payment and IRS Notice 1444-B for the second EIP to document how much stimulus money you were sent. If you threw those letters out or did not receive them, some taxpayers may be able to research any direct deposit money received by reviewing their bank statements for Economic Impact Payments. 4. If you can’t pay, look into an installment planYou may qualify for an online payment plan or an installment agreement that allows you to pay off an outstanding balance over time, according to the IRS. If you already have a payment plan, you may still qualify to use the plan option to revise your existing agreement.5. How to get free tax preparation servicesIRS Free File at IRS.gov will enable you to use tax software to prepare and file your federal income tax online for free. To qualify, your income must be $72,000 or less. Go directly to IRS.gov to browse all offers.6. Beware of tax scamsBe wary of unscrupulous individuals who may offer to prepare your taxes but could steal important personal information from you. As part of a hot scheme in 2021, identity thieves are targeting tax professionals by sending an email that appears to be from the IRS. The phony email refers to “IRS Tax E-Filing” and verifying key e-file information.Remember, the IRS doesn’t initiate contact with taxpayers via email, text message or social media. With the deadline here, Florida Attorney General Ashley Moody issued a consumer alert to remind Floridians to be on the lookout for tax scams and identity theft. Earlier this year, she released a tip sheet for residents. 7. Watch out for wrong numbersYou want to make sure that you’ve entered the correct Social Security numbers for yourself, your spouse and your children. The wrong numbers can delay your tax refund and cause headaches. 8. Get the address rightIf mailing a return, send it to the correct address.Your best bet, typically, is to file your tax return electronically and request direct deposit if you’re owed a refund. If you owe the IRS money, you can e-file and pay via electronic funds withdrawal or pay online. See IRS.gov/payments. But if you are mailing an income tax return, take time to double check where you’re sending it. You could be surprised to learn that you must send some returns to a different IRS location than a year ago.9. Make sure your bank account is correctBe sure to double check the routing and account numbers on your return if you’re expecting a refund via direct deposit. Taxpayers who are anticipating a refund should choose direct deposit, which is typically the fastest way to get your money.10. Did you change your name? If you legally changed your name with the Social Security Administration, make sure it is reflected in your federal and state tax returns. A mismatch may delay the processing of your returns. 11. Don’t make math mistakesMath errors are among the most common mistakes that filers make. They range from simple addition and subtraction to more complex calculations. Taxpayers should always double check their math. This is when tax prep software can come in handy since it does the math automatically.12. Report all of your incomeIndividuals often don’t realize they generated income that is subject to tax, including unemployment compensation, rental income, or earnings generated from stock options, dividends and interest. Omitting income from a tax return can result in unpaid taxes subject to interest and various penalties.A person may be unfamiliar when they receive a new tax form, such as a 1099 or K-1, that includes income to be reported on an individual income tax return. It’s crucial to report your activities from these forms. The IRS generally receives a copy and can determine if any discrepancies exist from their records.Child tax credit: How to know if you qualify, how much you’ll get paidBiden increased child tax credit payments under his American Rescue Plan. Here’s the latest on how much you’ll get and when you’ll get the payments.Just the FAQs, USA TODAY


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