2021 Tax Season Update

2021 Tax Season Update

Tax Season is here. The Federal Government began accepting tax forms on February 12, 2021, for the 2020 tax year. Each tax year can look a little different based on what has happened in your life, and 2020 may have had some changes for you.

You could get assistance filing for free.

Did you know that the federal government partners with online tax preparation companies to help individuals prepare and file their taxes for free? IRS Free File is available to all Americans, with additional help available for individuals who make less than $72,000 a year. Taxpayers should be careful in choosing a tax preparer and be aware of scams and cons. Be wary of instant wealth claims, if it sounds too good to be true, it probably is.

You can still receive a stimulus payment.

If you were eligible for the Economic Impact Payment but did not receive the full amount you can claim the Recovery Rebate Credit on your 2020 taxes. Even if you are not normally required to file your taxes, you must file your 2020 taxes to receive any outstanding Economic Impact Payment.

Unemployment benefits are taxable.

If you received unemployment compensation in 2020 you may not be aware that the money received through this program is taxable. If you received unemployment income and want to know if you will owe taxes on this money you can use this tool to help. If you discover they can be taxed, you will want to locate your Form 1099-G and use it when you file your 2020 taxes. The IRS has more information on how to pay taxes on unemployment compensation.

If you are eligible for a refund, you can have it direct deposited into a bank account.

When you file your taxes online, you will have an option of how you would like to receive your refund. A tax refund can be considerable, so you will want to plan for what you will do with it.  If you choose to have your refund direct deposited into a bank account, you may want to consider depositing it into your savings account. This could help you to build or rebuild your emergency fund or save towards a goal.

Additionally, you might consider using your tax refund to pay off credit cards or other high-interest debt.

For more information on filing your 2020 taxes, you can visit the IRS website.

Written by: Courtney Woelfl, Family and Consumer Sciences Educator, Cuyahoga County

Reviewed by: Melissa J. Rupp, Family and Consumer Sciences Educator, Fulton County