Happy New 2021 Tax Year! It's got to be better than 2020, right? Right?!?
We all know that you're not going to immediately turn all the crazy that was 2020 around, even in the tax world. But hope springs eternal with the start of a fresh 12 months.
Please don't disappoint us!
COVID-19 complications pushed filing of 2019 returns to mid-July last year. Even then, some folks got extensions into October. That means that the crush of taxes was with more of us than usual for longer than usual.
But the Internal Revenue Service says it is ready to get this 2021 filing season started on time. Fingers are crossed that the agency is able to do that.
And so that we taxpayers will be just as ready, the ol' blog's Tax Tips return.
Still not necessarily daily: Over the years that Tax Tips has been a regular feature on the ol' blog, it's undergone some changes.
In the beginning, during the January through April 15 high tax filing season, a new tip appeared every week day. Then I got ambitious and expanded the tips to weekends, too. Then reality hit, and I went back to Monday-through-Friday tips only.
Then I got older and gained a little more of a work/life balance perspective. So in 2019, the Tax Tips started showing up when they showed up, but with at least a couple a week.
That continued in 2020. And, you guessed it, the tidbits of tax advice will remain on this schedule again in 2021.
But fear not, fellow tax geeks! I promise you'll still get lots of valuable filing information here on the ol' blog and in the featured Tax Tips.
Those posts that earn the honor of being dubbed official Tax Tips will be, as in prior years, highlighted at the top of the ol' blog's right column, just under the old-school yellow No. 2 pencil tip image.
New monthly tip collections: This year, though, there will be one other change. The Tax Tips are going year-round.
Technically, they were posted throughout the year, but separated into filing season tips through, well, the end of the filing season in mid-April. Then they were featured as Weekly Tax Tips as an acknowledgement that things had, hopefully, slowed down a bit after most of us submit our 1040s.
But again, as 2020 showed us, taxes persist whatever the calendar. So all the tips will go up without any pre/post-April designation. They'll simply be Tax Tips.
On thing will continue, though, will remain. Once a tax tip is posted, it will be will be archived on a monthly tax tip page. Since you're reading this, you know the January 2021 is live. The subsequent months' tip collections will go up when those months arrive. You'll find the links at the bottom of this page.
But I'm getting ahead of myself. Let's get to 2021 taxes and tips for all the planning and filing moves we need to make so we can finish up our 2020 tax year duties and reduce our 2021 taxes, which started running on Jan. 1.
- Tax rates and income brackets for 2020 & 2021 — Hello January, the month when tax years collide. We're getting ready to file our 2020 tax year returns, but we're also starting to make plans that, if implemented properly, will reduce our 2021 tax bills. Key information for both years includes the tax rates and income brackets they encompass. You can find 2020 and 2021 tax rates and brackets in the first of the ol' blog's 10-part annual inflation series. And at the end of that post, there's a directory to the nine other tax areas affected by annual inflation adjustments. (Jan. 1, 2021)
- Claiming the Recovery Rebate Tax Credit — Most folks got their two 2020 coronavirus economic impact payments automatically. But most isn't all. If you didn't get either or the maximum COVID-19 cash, you can claim the money as the Recovery Rebate Tax Credit on your 2020 tax return. (Jan. 5, 2021)
- Reporting your winnings to the IRS — Uncle Sam apparently is Lady Luck's cousin. Your lottery jackpot, as well as other gambling winnings and prizes, are taxable income. Here's how to report them to the Internal Revenue Service on Form 1040's Schedule 1. (Jan. 11, 2021)
- Final 2020 estimated tax payment due — Do you pay estimated taxes? Your final 2020 tax year payment is due on Friday, Jan. 15. And if you got unemployment benefits or did gig work last year, take note. You likely owe this, too, on this money that's not generally subject to withholding. (Jan. 13, 2021)
- Free File 2021 is open for business — If you made $72,000 or less last year, you can use Free File. And you can use it now. The no-cost online tax return preparation and e-filing partnership between the Internal Revenue Service and Free File Alliance tax software companies is open. (Jan. 15, 2021)
- Tax software enhances sign-on security — When you log on to your tax software this filing season, expect it to take a tad longer. Many tax software programs now are requiring multifactor authentication. (Jan. 16, 2021)
- Tax filing season starts Feb. 12 — Eager tax return filers, mark your calendars. The Internal Revenue Service will start accepting 2020 tax year returns on Feb. 12. Yes, that's about 2 weeks later than usual, but we're all still feeling COVID-19's annoying effects on our taxes. And the IRS says some refunds should be issued by early March. (Jan. 17, 2021)
- Deducting volunteer expenses — There are many ways to give to charities. One is by volunteering at your favorite nonprofit. While you can't claim the cost of your time or expert services, you can count related expenses, such as office supplies you bought the charity or miles driven to deliver meals to the homebound, as an itemized charitable tax deduction. (Jan. 18, 2021)
- Statements needed to file your tax return — The only good thing about the IRS pushing the opening of tax filing season to Feb. 12 is that by that date we should have all — OK, most of — the tax statements we need to complete our tax returns. (Jan. 19, 2021)
- IP PIN option now available to all — Worried about someone stealing your tax identity? The IRS now is letting all taxpayers get an Identity Protection Personal Identification Number, or IP PIN, which will help the agency stop fake returns claiming fraudulent refunds. (Jan. 20, 2021)
- Student loan interest tax deduction — Having student loan payments on hold during the COVID economic struggles has helped. But if you paid on your higher-education debt before the pandemic relief was implemented last year, be sure to claim any student loan interest on your 2020 tax return. (Jan. 21, 2021)
- 7 reasons to file your taxes early — Tax filing season 2021 is later than usual, leaving millions champing at the bit to get their 1040s to the IRS. Here are some reasons why they're so eager to file soon. Some might apply to you, too. (Jan. 25, 2021)
- Homeowner tax breaks — Owning a home can be hassle, but many still want this part of the American Dream. And the tax code can help with some tax breaks. Here are 6 of the more popular tax benefits of owning a residence. (Jan. 26, 2021)
As I mentioned earlier on this inaugural 2021 Tax Tips page, as soon as January wraps and all this month's tips fill up this page, I'll move on to February through December Tax Tips on their own pages.
All the Tax Tip page links already are live and listed below. If, however, you click later in the year, you'll be greeted by a fun GIF instead of tips. Tax info will replace that animated fellow when the months arrive.
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