The possiblity of a third stimulus payment may give families who faced financial hardship in 2020 another reason to file their tax returns early. The IRS is accepting 2020 tax returns starting February 12, 2021. The 2021 tax filing season now is officially, although only partially, open. Follow me on Twitter: @ashleaebeling and contact me by email: ashleaebeling -- at -- gmail -- dot -- com, © 2021 Forbes Media LLC. The 2021 tax season is shaping up to be a confusing one, with an overwhelmed IRS trying to handle 2020 federal returns and stimulus payments. Benefit 3: The chance to set up direct deposit with the IRS or fix any errors. tool. The money goes in pretax, grows tax free, and comes out tax free if you use it for eligible healthcare expenses. You need proof of your gift. Personal Finance Insider named H&R Block the best tax software in 2021. UPDATE, Jan. 15, 4:00 p.m.: The IRS opened up its Free File site on Jan. 15. “I can’t stress enough the importance of filing electronically and choosing direct deposit. For details, see the new IRS Form 8915-E and instructions. The deadline to file your return and pay your taxes is April 30, 2021. We explain what you need to know. I've written for Forbes since 1997. If you’re self-employed or have a spouse or a common-law partner who is self-employed, the deadline to file your taxes is June 15, 2021. IR-2021-16, January 15, 2021 WASHINGTON ― The Internal Revenue Service announced that the nation's tax season will start on Friday, February 12, 2021, when the tax agency will begin accepting and processing 2020 tax year returns. (There's more below on how to calculate how much money you might get in addition to your tax refund.). The good thing about filing your taxes early is that you don't have to pay your tax bill at the same time. Democrats Propose Round 3 Of Stimulus Checks: What You Need To Know, IRS Should Deliver Full Stimulus Payments To Those Who Owe Back Taxes, Urges Taxpayer Advocate, I cover personal finance, with a focus on retirement planning, trusts and estates strategies, and taxwise charitable giving. Here’s a guide to some key issues. And here's how to calculate your adjusted gross income. ... Returns as of 2/19/2021. This is the safest and easiest way to file an accurate tax return and get a refund,” says IRS Chief Taxpayer Experience Officer Ken Corbin. If you didn’t get a 1099-G, check your state’s unemployment compensation website to access it. Assuming seven days is the soonest you'd get your combined tax refund-stimulus payment and 21 days is the longest, we've sketched out what a difference filing sooner rather than later could make. The IRS says 90% of filers will receive their refunds in 21 days or sooner. Save for healthcare expenses, or retirement, by maxing out your HSA. All Rights Reserved, This is a BETA experience. The IRS says that paper-filed tax returns and paper checks will take even longer this year. Advice on 2020 tax returns and stimulus check ... there's another reason to file early: To get your tax refund as soon as possible, ... 2021 / 7:44 AM Save for retirement by maxing out your 2020 IRA. It'll also show you the last four digits of the bank account it was deposited in if it was deposited directly. The deadline for filing taxes this year is still April 15, 2021. Here's how to calculate the payments you were owed: Next, you'll want to check your bank account where your payments were deposited to determine the amount you received. For those who are self-employed, or who have a spouse/partner who is self-employed, the deadline extends until June 15, 2021. File electronically and use direct deposit. With Congress Debating Round 3 Stimulus Payments, Should You Rush Or Wait To File Your 2020 Return? The IRS likely will begin accepting electronic returns … ALL RIGHTS RESERVED. Save on time and effort by filing your tax return early. The Internal Revenue Service says taxpayers should expect limited face-to-face operations, heavy call volume and paper-processing delays as it opens today for tax season 2021, accepting tax returns for tax year 2020. That's a great reason to file early every year. That means you can make 2020 contributions through April 15, 2021. If you have child dependents, this information about the child tax credit could help put more money in your pocket. From there, it could take anywhere from one to three days for the money to appear in your bank account. © 2021 CNET, A RED VENTURES COMPANY. VIDEO 1:03 01:03 Here are the 3 … If you got a refund, especially a big one, you can use the IRS tax withholding estimator to determine how much tax to withhold from your paycheck. But there are also benefits for the tens of millions of people who'll be eligible for a third stimulus payment of up to $1,400 per person -- a stimulus check that may arrive sooner than you think. This is the day designated by the U.S. government as the day taxes are due each year. Taxpayers have until Thursday, April 15, to file their returns and pay any tax owed. If one of your previous stimulus checks was mistakenly reduced, you can claim the difference as a tax credit when you file this year. Typically you contribute via salary deferrals but you can top up your annual contribution for the prior tax year through the tax filing deadline. Tweak tax payments for 2021. In 2021, the IRS will begin e-File on February 12, 2021. If the IRS calculates your sum based on your 2019 life circumstances, you'd miss out on the rest of the check for a year or more, by the time it's processed. tool on the IRS website lets you plug in your name, filing status and refund amount to check on the status. Normally, the filing period begins in late January, allowing early birds to submit their returns and get their refunds. If you take out money for non-healthcare needs, you’ll owe taxes—plus a 20% penalty if you’re under 65. For taxpayers filing early who are claiming the earned income tax credit or the additional child tax credit, the tool should update by February 22 (they should see refunds by the first week of March). Some states are providing tax relief for the state tax hit on unemployment benefits. Or, if you were claimed as a dependent on someone else’s tax return in 2018 or 2019 but won’t be for 2020, you may be eligible for the credit. By filing now, you could also set yourself up so you don't have to wait until 2022 to claim any additional stimulus money from a potential third check. That’s the day when the IRS will start accepting and processing 2020 taxes. In most cases, the ATO will only accept lodgement of 2021 tax returns after 01 July 2021. Follow me, I cover personal finance, with a focus on retirement planning, trusts and estates strategies, and taxwise charitable giving. There are many reasons why the IRS might still owe you stimulus check money, including: The IRS requires you to fill out either form 1040 or 1040-SR if you're going to claim a Recovery Rebate Credit on your 2020 taxes. About 8 million non-filers will also have to file a tax return this year to get their stimulus payment. The tax-filing deadline for most Canadians (for the 2020 tax year) is on April 30, 2021. If you're due a refund from the IRS, it'll include both your full refund amount and whatever you're owed from the Recovery Rebate Credit. Then fill out a new form W-4 withholding allowance certificate, and you’ll get more in each paycheck, instead of essentially loaning it to Uncle Sam. You should have received a Form 1099-G showing the amount you were paid and any federal income taxes withheld. Any money you don't get as part of the automatic payment you'd have to claim a year from now on your 2021 taxes. If you have a hig-deductible health plan, you can contribute to a health savings account and get a triple tax benefit. The fastest way to get your money is to file electronically and have the funds deposited in a bank account. Lump Sum Investing—How To Decide, Investment Fees Can Invalidate The 4% Rule, Master List Of All Major International Airline Coronavirus Change And Cancellation Policies, How A 1% Investment Fee Can Wreck Your Retirement, IRS Mistakenly Tells 109,000 Taxpayers It Held Back Stimulus Payments To Offset 2007 Taxes, State Death Tax Hikes Loom: Where Not To Die In 2021, new $600 charitable tax deduction for 2021. The backlog for paper returns is large and likely to grow, so anyone. However, you may want to file sooner. Watch out: “These gifts must be substantiated,” says Conrad Teitell, a tax lawyer at Cummings & Lockwood in Stamford, Connecticut. If you have self-employment income, make sure you keep track of deductible expenses relating to your gig, and if you’ve set up a home office, you might qualify for the home office deduction. For 2020, the limit on annual contributions to an IRA (pretax or Roth or a combination) is $6,000, plus a $1,000 catch-up contribution allowed if you’re 50 or older. Opinions expressed by Forbes Contributors are their own. Yes, it's that simple. The normal deadline for tax filing and tax payment sticks in 2021 unless the CRA extends both deadlines again like last year. qualified for a check but didn't receive all the money, help you claim missing stimulus payment money, non-filers will also have to file a tax return, have to wait until 2022 to claim any additional stimulus money from a potential third check, you'd have to claim a year from now on your 2021 taxes, deposited directly into your bank account, Where's My Refund tool will reflect the status of your refund, this information about the child tax credit, how to calculate your adjusted gross income. For example, if your income was lower in 2020 than 2019, you may be owed a partial credit. You can make tax year 2020 contributions to an Individual Retirement Account through April 15, 2021, and take a tax deduction if you’re eligible. Even though taxes for most taxpayers are due by April 15, 2021, you can e-file (electronically file) your taxes earlier. This includes basic state benefits as well as the extra $600 weekly CARES Act federal pandemic benefits. Benefit 1: The earlier you file your taxes, the sooner you'll get your tax refund (you can estimate the total here). It's more frustrating for those taxpayers who, because of COVID-19 complications (which also created this year's filing delay), are really counting on their tax refunds to cover expenses. The IRS also gives this recommendation. ... 5 ways COVID-19 could affect your tax return. If the tax credit is more than you owe, you'll receive the difference as a refund. Alternatively, you can recontribute money back into a retirement account and undo the tax consequences of the distribution. Attention early tax return filers. The CRA reminds taxpayers to gear up and prepare returns for 2020 taxes early. If you're owed a tax refund and stimulus money, both will arrive as part of the same payment. Covid-19 related 401(k) distributions. But this year, the IRS won't start accepting 2020 tax returns until February 12, 2021. You should file your taxes early so you can avoid delays when waiting for your tax refund. You can provide routing information for up to three accounts—even retirement accounts—on your tax return to which the IRS can send your refund. Let's say you made less money in 2020 than in 2019, or you had a new baby in the last year. “Folks were disappointed that the Covid-related relief wasn’t extended for 2021,” says Lisa Loesel, an employee benefits lawyer with McDermott Will & Emery in Chicago. Now's not the time to delay your tax return. If you’re eligible—and either didn’t receive a payment or think you qualify for more than you got—you can claim a Recovery Rebate Credit on your 2020 tax return. UPDATE, Jan. 15, 11:20 a.m.: The full 2021 filing season will start on Feb. 12. Details to come shortly in a separate post. The due date for first-quarter 2021 estimated taxes is April 15, 2021. A personalized refund date should show up 24 hours after you e-file. If you're an early bird when it comes to filing your tax return, you won't have to wait much longer before the IRS will accept your return. you won't be filing taxes for 2020, and you're still owed a stimulus check. The basic rule is this: Individuals must file a tax return if they have net earnings from self-employment of $400 or more from gig work, even if it’s a side job, part-time or temporary. Here's what to do if you're a non-filer, i.e. The Covid / Coronavirus stimulus payments you received will NOT affect your tax refund. Benefit 4: You'll stand a better chance of getting your full payment if, as seems likely, there's a new stimulus check approved in 2021. IRS encourages early filing of 2020 tax returns It’s time to start thinking about your 2020 tax returns. Most refunds are sent within 21 days of e-filing. Some Dutchies will be stressing to have this done by April 1, as then they can potentially get a refund by July 1. You'd receive a $1,000 payment from the US Treasury. That's the latest start to tax season we've ever seen. All taxes owed must still be paid by April 30, 2021. April 15, right now, is the deadline for submitting your tax return this year. The 2021 tax filing season is on the horizon and kicks off on February 22, 2021. Stimulus payment true up. Most taxpayers got two economic-impact payments in Round 1 and Round 2. On the flip side, if you owe a lot at tax time, you might need to make estimated tax payments for 2021. People with direct deposit accounts on file with the IRS have typically received their stimulus payments faster than those getting money in the mail. That's frustrating for the millions of taxpayers who traditionally are early return filers. And then there’s all the pandemic-related tax law changes to consider. (If you're on the hook for taxes but you're owed stimulus check money, the amount you have to fork over will be reduced. Next, your tax returns play a big role in calculating the next round of stimulus check money. To figure out whether and how much money you're owed from a previous round of stimulus checks, you first have to determine how much you were owed for each previous payment, then subtract from that any amount you already received. If you took a CARES Act 401(k) or IRA distribution in 2020 under the loosened rules for tapping your 401(k) penalty free, you can report all of the income on your 2020 tax return or in equal installments over three years. So, if you file on the first day, you might still be waiting until February 15 for your refund. 4 reasons to file your tax return as soon as possible, now that tax season is here. One out of five taxpayers don’t get their tax refunds by direct deposit. Plus, getting your taxes filed could be your ticket to finally receiving the first or second stimulus payment if you're one of the millions who qualified for a check but didn't receive all the money -- even if it was a clerical error or some other issue that caused your check to never arrive. When is Tax Day 2021? Tax Season 2021 starts Feb. 12. There's also a form to help you figure out the amount you're owed on page 59 of this PDF detailing instructions for 1040 and 1040-SR tax forms, but it's a doozy to follow. 4 reasons you'll want to file your taxes early in 2021 Benefit 1: The earlier you file your taxes, the sooner you'll get your tax refund (you can estimate the total here). Check the IRS Where’s My Refund? However, if you're mailing documents to the IRS, expect massive delays. (Here's what to do if you didn't get the IRS notice.). The deadline isn't until April 15 to submit your tax return, but 2021 isn't the year to wait around to file. Don’t procrastinate or else pay late filing penalties. Once you have the amount you're owed worked out, you'll enter it on line 30 of either of those forms. If you picked up a side job during the pandemic, you have to include it on your tax return as self-employment income. “Now we’re back to the standard hardship rules and standard plan loan rules.”. Federal income tax refunds will be delayed significantly in 2021 after the Internal Revenue Service announced a date for starting processing returns. If you made cash gifts to charities in 2020, there’s a new $300 above-the-line charitable donation deduction per tax return. The Internal Revenue Service has just announced that the 2021 tax filing season start date will be Feburary 12, 2021. The IRS is pushing back the beginning of the 2020 tax season to Feb. 12. While we're almost there, that's still 16 days later than last year. The IRS should've sent you a letter within 15 days of issuing your stimulus check, however it was issued, and that letter should show how much money you received. How early can I get an advance on my tax refund? Last year, as a result of the coronavirus epidemic, the IRS extended the deadline for filing tax returns to July 15, 2020. On the flip side, if you owe a lot at tax time, you might need to make estimated tax payments for 2021. The IRS says its Where's My Refund tool will reflect the status of your refund within 24 hours of filing, which could include a confirmation that your refund has been issued. The article "Tax Season Starts February 12: Why You Should File as Early as You Can" originally published on Grow+Acorns. Substantiation rules for cash gifts by itemizers also apply to nonitemizers. If you’re self-employed and have more room for retirement savings, you can still open and fund a SEP-IRA for 2020 through April 15. 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