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Things taxpayers should know when choosing between standard and itemized deductions Deductions reduce the amount of taxable income when filing a federal income tax return. In other words, they can reduce the amount of tax someone owes. Most taxpayers have a choice of either taking the standard deduction or itemizing their deductions. The standard deduction may be quicker and easier, but, itemizing deductions may lower taxes more, in some situations. It's important for all tax...payers to look into which deduction method best fits them. New this year Following tax law changes, cash donations of up to $300 made by December 31, 2020 are deductible without having to itemize when people file a 2020 tax return. Here are some details about the two methods to help people decide deduction to take: Standard deduction The standard deduction is an amount that reduces taxable income. The amount adjusts every year and can vary by filing status. The standard deduction amount depends on the taxpayer's filing status, whether they are 65 or older or blind, and whether another taxpayer can claim them as a dependent. Taxpayers who are age 65 or older on the last day of the year and don't itemize deductions are entitled to a higher standard deduction. Taxpayers benefit from the standard deduction if their standard deduction is more than the total of their allowable itemized deductions. They can use the Interactive Tax Assistant, How Much Is My Standard Deduction? to determine the amount their standard deduction and if they should itemize their deductions. Itemized deductions Taxpayers may itemize deductions because that amount is higher than their standard deduction, which will result in less tax owed or a larger refund. In some cases, they not allowed to use the standard deduction. Tax software can guide taxpayers through the process of itemizing their deductions. Taxpayers who itemize file Schedule A, Form 1040, Itemized Deductions or Form 1040-SR, U.S. Tax Return for Seniors. A taxpayer may benefit by itemizing deductions if any of following apply to their tax situation, they: Had large uninsured medical and dental expenses Paid interest and taxes on their home Had large uninsured casualty or theft losses Made large contributions to qualified charities

If you received interest income on a refund payment last year, keep in mind that payment is taxable income. Watch this video for more info.

As required by law, all first and second Economic Impact Payments issued; eligible people can claim Recovery Rebate Credit WASHINGTON The IRS announced today that, as required by law, all legally permitted first and second round of Economic Impact Payments have been issued and the IRS now turns its full attention to the 2021 filing season. Beginning in April 2020, the IRS and Treasury Department began delivering the first round of Economic Impact Payments within two weeks o...f the legislation. The IRS issued more than 160 million EIPs to taxpayers across the country totaling over $270 billion, while simultaneously managing an extended filing season. In addition, since Congress enacted the COVID-related Tax Relief Act of 2020, the IRS has delivered more than 147 million EIPs in the second-round totaling over $142 billion. The legislation required that the second round of payments be issued by Jan. 15, 2021. While some second round Economic Impact Payments may still be in the mail, the IRS has issued all first and second Economic Impact Payments it is legally permitted to issue, based on information on file for eligible people. Get My Payment was last updated on Jan. 29, 2021, to reflect the final payments and will not update again for first or second Economic Impact Payments. Most people who are eligible for the Recovery Rebate Credit have already received it, in advance, in these two rounds of Economic Impact Payments. If individuals didn't receive a payment or if they didn’t receive the full amounts they may be eligible to claim the Recovery Rebate Credit and must file a 2020 tax return. Eligibility for and the amount of the Recovery Rebate Credit are based on 2020 tax year information while the Economic Impact Payments were based on 2019 tax year information. For the first Economic Impact Payment, a 2018 return may have been used if the 2019 was not filed or processed. Individuals will need to know the amounts of any Economic Impact Payments they received to claim the Recovery Rebate Credit. Those who don’t have their Economic Impact Payment notices can view the amounts of their first and second Economic Impact Payments through their individual online account. For married filing joint individuals, each spouse will need to log into their own account. To avoid refund delays, the IRS urges people to file a complete and accurate tax return. Filing electronically allows tax software to figure credits and deductions, including the Recovery Rebate Credit. The Recovery Rebate Credit Worksheet on Form 1040 and Form 1040-SR instructions can also help.

The 2021 tax filing season begins Feb. 12, but you don’t have to wait. The IRS urges you to file electronically with direct deposit as soon as you have the info...rmation you need. Direct Deposit is the fastest way to get your money right in your bank account. Learn more, click here: https://go.usa.gov/xAVaG See more

The IRS released a state-by-state breakdown of the roughly nine million people receiving a special mailing this month encouraging them to find out if they're el...igible to claim an Economic Impact Payment. These letters will go to people who typically aren't required to file federal income tax returns but may qualify for an Economic Impact Payment. The letter urges recipients to visit the special Non-Filers: Enter Payment Info Here tool on IRS.gov before the October 15 deadline to register. To claim yours, click here: https://www.irs.gov/coro/non-filers-enter-payment-info-here #EIPbyOct15 See more

Payroll tax cuts starts today which means taxes will not be taken out of your paychecks as long as you make less than $104,000 annually. Listen to me save that money don’t blow it. You will need that money later on. You have to pay that money back one way or another which means your employer will take a higher percentage of payroll taxes from your paycheck starting January 1, 2021-April 30, 2021. Your paycheck will be significantly lower during that time period. Don’t get caught up in the hype that you have more money because in reality by the end of April 30, 2021 it balances out to being the same amount of money you would have made anyway without the cut. Don’t put yourself in debt because of this.

The IRS is reopening the registration period for federal beneficiaries who didn’t receive $500 per child payments earlier this year. We’re doing this to help ta...xpayers who were unable to provide their information in time to receive Economic Impact Payments for their children. Use the Non-Filers tool on IRS.gov starting Aug. 15 through Sept. 30 to enter information on qualifying children to receive the supplemental $500 payments. To learn more, click here: www.irs.gov/nonfilereip See more

IRS takes new steps to ensure people with children receive $500 Economic Impact Payments WASHINGTON The Internal Revenue Service continues to look for ways to help people who were unable to provide their information in time to receive Economic Impact Payments for their children. As part of that effort, the Internal Revenue Service announced today it will reopen the registration period for federal beneficiaries who didn’t receive $500 per child payments earlier this year. Th...Continue reading

IF YOU RECEIVED AN ECONOMIC IMPACT PAYMENT OR PANDEMIC UNEMPLOYMENT PAYMENT YOU WILL NEED TO REPORT THESE ITEMS ON YOUR TAXES NEXT YEAR. Good recordkeeping is an essential element of tax planning Now is a good time for people to begin thinking about next year’s tax return. While it may seem early to be preparing for 2021, reviewing your recordkeeping now will pay off when it comes time to file again.... Here are some suggestions to help taxpayers keep good records. Taxpayers should develop a system that keeps all their important information together. They can use a software program for electronic recordkeeping. They could also store paper documents in labeled folders. Throughout the year, they should add tax records to their files as they receive them. This includes Notice 1444, Your Economic Impact Payment, and unemployment compensation documentation. Having records handy makes preparing a tax return next year easier. Taxpayers should notify the IRS if their address changes. Taxpayers should let the IRS know if they change their address. They should also notify the Social Security Administration of a legal name change to avoid a delay in processing their tax return. Review their tax return to make sure they didn’t overlook any credits or deductions. Double check credits and deductions. Records that taxpayers should keep include receipts, canceled checks and other documents that support income, including any unemployment compensation. Taxpayers should also keep records relating to property they dispose of or sell. They must keep these records to figure their basis for figuring gains or losses. Taxpayers should keep records for three years from the date they filed the return. Taxpayers who have employees must keep all employment tax records for at least four years after the tax is due or paid, whichever is later.

What someone should do if they missed the July 15 deadline to file and pay While the federal income tax-filing deadline has passed for most people, some taxpayers haven’t filed their 2019 tax returns yet. If a taxpayer is entitled to a refund, there’s no penalty for filing late. Penalties and interest will begin to accrue on any remaining unpaid tax due as of July 16, 2020.... Anyone who didn’t file and owes tax should file a return as soon as they can and pay as much as possible to reduce penalties and interest. Electronic filing options, including IRS Free File, are still available on IRS.gov through Oct. 15, 2020 to prepare and file returns electronically. Taxpayers should then review their payment options. The IRS has information for taxpayers who can’t pay taxes they owe. Some taxpayers may have extra time to file their tax returns and pay any taxes due. This includes some disaster victims, military service members and eligible support personnel in combat zones. Filing soon is very important because the late-filing penalty and late-payment penalty on unpaid taxes adds up quickly. However, in some cases, a taxpayer filing after the deadline may qualify for penalty relief. For those charged a penalty, they may contact the IRS by calling the number on their notice and explain why they couldn’t file and pay on time. Additionally, taxpayers who have a history of filing and paying on time often qualify for administrative penalty relief. A taxpayer will usually qualify if they have filed and paid timely for the past three years and meet other requirements. For more information, see the first-time penalty abatement page on IRS.gov. State filing and payment deadlines may be different from the federal July 15 deadline. A list of state tax division websites is available through the Federation of Tax Administrators. The IRS is processing tax returns, issuing refunds and accepting payments. Taxpayers who mail or who have already mailed a tax return will experience a longer wait. There is no need to file a second tax return or call the IRS.

If you owe 2019 income taxes and estimated tax for 2020, you must make two separate payments on or by July 15, 2020. One for your 2019 income tax liability and ...one for your 2020 estimated tax payments. If you owe two estimated tax payments, they can be combined into a single payment. Individuals can use Direct Pay for two payments each day. For businesses or those making large payments, the best payment option is the Electronic Federal Tax Payment System, which allows up to five payments per day. Enrollment is required. Visit IRS.gov/eftps for details. For more info and details about other payment options, click here: https://go.usa.gov/xfcAb

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