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February 2021 Tax Tips

Hearts, flowers and a February filing season start.

Tax tip pencilFebruary is home to the most romantic day of the year, Valentine's Day. In 2021, the Internal Revenue Service is set to be taxpayers' Valentine.

No, it's not because we love the agency. It's because the filing season this year doesn't officially start until Feb. 12, the Friday before St. Valentine's Weekend.

The real if not totally heartfelt reason for the delay, which is around two weeks later than usual, is, you guessed it, COVID-19. The IRS spent much of last year like the rest of the world, trying to stay safe. That meant it had to make extra efforts to safeguard its workers, while still providing regular services to taxpayers.

On top of its usual coronavirus-complicated duties, Uncle Sam's tax collector also was in charge of distributing millions of economic impact payments designed to help folks hard hit financially by the pandemic.

And on top of it all, Congress made even more tax law changes at the end of 2020.

All these actions on top of each other forced the IRS to push back the start of the annual filing season so it could update forms, publications and its computer operating systems. And, oh yeah, it's still operating under COVID-19 precautions since the virus just won't let go.

So while we might never fully embrace the IRS, let's at least not be too hard on the agency this year. As in all relationships, some slack occasionally must be cut.

With that in mind, tax tips in this shortest of months will aim to offer advice that can make your, and subsequently the IRS', lives a little easier. It's the obvious approach during this traditional month of love.

So with hand to heart, here goes!

  1. Tax treatment of your capital gains (or losses) — If your investments pay off, congratulations. The IRS is happy, too. It gets a cut. Just how much, though, depends on whether your capital gains were long- or short-term and if you can offset your unearned income with capital losses. The recent GameStop stock market mayhem offers a chance to review the tax implications of investing. (Feb. 1, 2021)
  2. Tax tips for gig workers — Whether you took some gig work last year to tide you over during your personal COVID-19 economic crisis or have been a full-time freelancer for years, these self-employment tax tips can help focus on and make the most from your jobs. (Feb. 2, 2021)
  3. EITC claiming tip: use your 2019 income — Every filing season, the IRS promotes the Earned Income Tax Credit (EITC), a valuable tax break for low- and middle-income filers that too often is overlooked. This year the focus also is on an option to use 2019 income to claim the EITC on your 2020 tax return. The earnings year shift could help those who didn't make much or any money last year because of COVID-19 get more from the EITC. (Feb. 4 2021)
  4. PPE costs count toward educators' deduction — We're asking a lot of our teachers during the coronavirus pandemic. This year, though, there is one small tax break tweak for them. They now can count the costs of personal protective equipment (PPE) and other COVID-19 related classroom costs toward the $250 educators' tax deduction. (Feb. 7, 2021)
  5. Taxes due on unemployment benefits — Being out of work is bad enough, but you also need to pay attention to the possible tax implications. The major one, and a surprise to many, is that unemployment benefits are taxable income. You must report the amount, which should be detailed on the Form 1099-G you got, on your tax return's Schedule 1 (line 7). (Feb. 9, 2021)
  6. Don't miss $500 tax credit for other dependents — Minor children and tax breaks for their parents or other guardians get a lot of attention. But some folks take care of older folks, too. If this is you, you need to look into the Credit for Other Dependents, or ODC in the Internal Revenue Service's slightly reversed acronym. If you and your other dependent qualify, it could get you a tax credit of up to $500. (Feb. 13, 2021)
  7. Use Form 8915-E to report, pay back early COVID-19 prompted retirement withdrawals — Did coronavirus-caused money troubles force you to break some next eggs? COVID-19 legislation made getting to retirement money easier, but you probably will still owe tax on the early withdrawals. You can get the taxes back by paying back the plan distributions and filing the finally updated Form 8915-E. (Feb. 18, 2021)
  8. Take a pre-disaster inventory — Disasters strike year-round and all across the country. Just ask Texans who were hit in Feb. 11, 2021, with a freakishly cold winter storm. The best thing we can do is prepare. Part of that is taking a pre-disaster inventory of your household goods. It will help you with your insurance claims and, if the catastrophe is declared a major disaster major disaster, claim your losses as a tax deduction. (Feb. 24, 2021)

Line of hearts

All the Tax Tip page links below are live. If, however, you click on a month later in the year, you'll be greeted by a GIF of man enthusiastically telling us to slow down, or Whoa Up! as we say here in Texas, instead of Internal Revenue Service and tax code tips. Tax info will replace this animated fellow when the calendar finally flips to those months.

January July
February August
March September
April October
May November
June December

 

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Today's Tax Tip

  • Tax-saving HSA contribution limits go up in 2026 — The amounts that health savings account (HSA) owners can put into this tax-advantaged medical plan is going up next year. The increase is part of the IRS’ adjustment this week of the 2026 limits for HSAs, associated high deductible health plans (HDHPs), and the lesser-used health reimbursement arrangement (HRA). (May 2, 2025)


  • Tax Tip; click pencil for all tax tip links

  • The 2025 Tax Tips offer ways to file your annual return, along with post-filing advice, important tax news and, of course, ways to cut your current tax year bill. You'll find the monthly assemblages on their own respective pages: January, February, March, April, May, June, July, August, September, October, November and December. Remember, tax tasks and tips don't stop after you file your annual return!

All About Kay

  • OK, some about Kay
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    Kay Bell — Native Texan
    (the blog title totally makes sense now, right?). Professional journalist. Tax geek.
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  • Tax Year 2025 Continues!

    We made it. Tax Day 2025 is finally over. For most of us. When the filing season started on Jan. 27, the IRS said it expected more than 140 million individual tax returns for tax year 2024 to be filed by April 15. When the month started, the agency was around 39 million short of that number. While many taxpayers no doubt got their 1040s in by Tax Day, million every year get an extension to file. That's fine.

    In fact, the Internal Revenue Service appreciates some of us spreading out our tax submissions. It gives the agency time to process the surge of returns that arrive en masse on April 15.

    But enough about Uncle Sam's tax collection issues. The focus now is on all y'all who filed for extensions, giving you another six months to complete your return. Let's get started on meeting that new Oct. 15 deadline. It will be here before you know it.

    The monthly tips and reminders a little further down this column can help you finish up your extended Form 1040. There also will be tax tidbits each month that make sure you meet other tax deadlines. And, of course, you'll find advice on ways to cut your 2025 tax bill.

    The monthly tips and reminders a little further down this column can help you finish up your extended Form 1040. There also will be tax tidbits each month that make sure you meet other tax deadlines. And, of course, you'll find advice on ways to cut your 2025 tax bill.
    Note: I'm in the Central Time Zone, so adjust accordingly for where you live.


Time for Tax Tasks


  • monthly tax moves


  • 💐 May 💐 is 💐 here! 💐

    You've got to love a month that starts with a celebration, at least globally. But even though May Day isn’t an official or very big deal here in the United States, there still are lots of other May celebrations. Cinco de Mayo. Mother’s Day. Memorial Day.

    May Pole Dance via GIPHY


    In between, we can celebrate the arrival of the month that, for most taxpayers, means the main 2025 tax task of filing our returns is behind us. Now it’s on to shower-fed flowers, balmy days, and additional tax moves to take care of so that the rest of the year goes smoothly. Let the May tax merriment begin!


  • May 1: It’s not such a merry day for some taxpayers. Not only did the residents of eight states have to earlier deal with a major natural disaster, their Tax Day that was delayed because of those damages is today, May Day, no doubt prompting a mayday call from some affected filers.

    May 2: The rest of us made it through last month, the one that is home to the annual U.S. filing deadline. Did Tax Day mean you got or are expecting a big refund from that filing? Or did you end up owing Uncle Sam a lot? Either way, with your most recent taxes fresh in your mind, it's a good time for a paycheck checkup to determine whether you should adjust your payroll income tax withholding.

    May 5: ¡Feliz Cinco de Mayo! Fiestas are always en vogue in Tejas, but the epitome of them is this Mexican holiday.

    Feliz Cinco de Mayo

    No, it is NOT Mexican Independence Day, and May 5 tends to spur more festivities here north of the border, especially when it comes to imbibing margaritas, the Lone Star State's unofficial cocktail. With every Cinco toast, remember that the cost of state and federal alcohol taxes are included in the mixing.

    May 11: Happy Mother's Day!

    Happy Mother's Day

    Your mom meant it when you were young and she told you she didn’t need a gift today. But she definitely will appreciate a longer-than-usual hug on her special day. Love, flowers, and the best of health and happiness to every mother, from the new ones just discovering the joys, tax and otherwise, of new parenthood to those gracefully maneuvering their Golden Years and getting some year-round tax-advantaged help from their families.

    May 12: If your job is as a server at a restaurant or at any other establishment where gratuities from customers are part of your compensation, I hope you get all the tips you deserve for doing your job well. Remember, though, that those tips are taxable income.

    restaurant check tip iStock
    Whether you're dining at your favorite eatery or getting food, groceries and/or prepared meals, delivered to your home, if a tip isn't included on your restaurant or delivery bill, click the image above to calculate how much to tip the person who brought it to you.

    And if you got at least $20 in gratuities in April for your extraordinary services as a food server or hair stylist or parking valet or whatever job where tipping is common, you must report that amount by today, a bit late since the normal 10th of the month deadline fell in May on Saturday. Use Form 4070 to let your employer know the total tips you took in last month.

    May 19: Millions of taxpayers got an extension to file, or automatically got a later Tax Day due to a major disaster declaration. These individuals can still file electronically, which the IRS recommends. E-filing will speed up processing of returns whenever they are filed, as well as help Uncle Sam get refunds out more quickly. And yes, some late filers are due refunds.

    The IRS-Free File Alliance partnership offers no-cost online tax preparation and electronic filing to taxpayers whose adjusted gross income (AGI) is $84,000 or less, regardless of filing status at the official IRS.gov Free File website.

    Even better for eligible late filers, Free File will be available through the Oct. 15 extension deadline, with the same eight software companies that participated last year back for the 2025 filing season.

    IRS Free File; click image for details

    If your income is too high, you still can file for free by using Free File's Fillable Forms option.

    May 23: Millions of Americans will be welcoming the unofficial start of summer this long Memorial Day weekend. It’s also when gasoline prices always seem to increase. Some of the pump price is attributable to fuel excise taxes. If pump prices climb too much, that may prompt you to look more closely into getting an electric vehicle (EV) before your next road trip, and before the current White House and Congress eliminate the potential $7,500 tax credit for some EVs.

    May 26: Yes, the end-of-May long weekend is a time for fun. But don’t forget the real reason for the Memorial Day holiday. Take time to honor the military personnel who made the ultimate sacrifice. And don't forget about their families. There are some tax considerations offered survivors of lost soldiers, sailors, and air crew.

    May 31: You filed your tax return six-plus weeks ago and you’re still waiting on your refund. What the what?! Quit fuming and check your refund’s status using the IRS' "Where's My Refund?" online tracking tool.

    Small Business Tax Calendar: If you run your own company, you know there are myriad important filing, deposit and record keeping dates throughout the year that your company needs to meet. You also can track key business and individual tax deadlines in IRS Pub. 509.

State Tax Help

  • Don't forget your state taxes!
    Forty-two states and D.C. collect personal income taxes. But even if you live in of the eight states without any income levy, you still face other state (and local) taxes.

    State Tax Departments provides links to your state's Web page. The companion page, Tax Tidbits, is the compilation of blurbs about each state's tax laws. And for more state tax news, check out all our state tax bloggings.

Tax Forms


  • Tax Forms
    Thanks to our increased use of tax preparers and computer software, many of us don't see our tax forms until we sign and file them. But knowing what's on these documents, either in paper or digital form, and why the IRS wants it is key to understanding our tax system. And knowledge definitely is power, especially when it comes to tax savings. Find this valuable information in the ol' blog's special Tax Forms 2025 page.

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    You also might enjoy these other tax tips from some of my tax-writing colleagues:

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    J.K. Lasser 2025 Taxes

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    I am a professional journalist who has been covering tax issues since 1999. I am not a professional tax preparer.

    The content on Don't Mess With Taxes is my personal interpretation and opinion based on my study and understanding of tax laws, policies, and regulations. It is provided for your private, noncommercial, educational, and informational purposes only. While I work to ensure each post's accuracy, the items are not recommendations of any specific tax action(s) you should or should not take. Similarly, mentions of commercial tax products or services are not endorsements.

    In other words, my ramblings on the ol' tax blog are free advice, and you know what they say about getting what you pay for. That's why when it is time for you to file your own taxes, I urge you to get additional, professional, paid-for guidance from an accountant, Enrolled Agent, or other reputable, qualified tax preparer who is familiar with your individual tax circumstances.

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COVID-19 & Taxes

  • COVID-19
    Coronavirus has wreaked havoc
    on the 2020 and 2021 tax seasons.
    These five Coronavirus (COVID-19) and Taxes pages have details:
    March-July 2020
    August-December 2020
    January-December 2021
    January-December 2022
    …and so it continues into 2023
    …and, alas, into 2024
    It is 2025 and, yes, it's still an issue
    You can find medical coronavirus resource links in the next section.

COVID-19 Resources

  • COVID-19
    Need help finding a coronavirus vaccine in the United States?
    Call 1-800-232-0233
    or TTY 1-888-720-7489.
    More information and resources at:
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    CDC Booster Shots
    HHS Combat COVID
    USA.Gov COVID Info

May 2025

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  •  Rain-dappled red yucca and spider by Kay Bell
    Red yucca and orb spider after April shower. (Photo by Kay Bell)
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Tell it to the Hill

  • DMWT Politics Posts
  • While it's easy to rail at the IRS, for the most part we can thank — or blame — Congress and the White House for our tax laws. So if you have an issue with tax legislation or want a tax bill passed, you need to let your federal legislators and the White House occupant know of your concerns. You can find out who in Washington, D.C., to contact (and how), as well as get information on your local lawmakers for matters, tax or otherwise, closer to home, at USA Gov.
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