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Weekly Tax Tips 2020 and, for now, 2021

Beyond Tax Day! Dealing with the filing extension deadline
and the tax tasks that are still ahead in 2020.

 

Tax tip pencilHappy New Tax Year 2021 Update: I'm a bit slow in getting the ol' blog's standing features switched over to reflect the brand spanking New Year. So until that happens (soon, I promise!), the Weekly Tax Tips in early January 2021 will be added to this list.

We did it! We made it through the delayed Tax Day 2020 of July 15. Now what?

Well, there is the Oct. 15 extension deadline, which thanks to the coronavirus tax postponements now is just three, instead of the usual six, months away.

Then there's the post-filing process.

If you filed, you need to gather up all the material you used to fill out your Form 1040 and file at least some of it away in your tax record keeping system.

If you got an extension, you need to keep all those tax statements handy so you can eventually file your return.

Bonus early tip #1: You don't have to wait until Oct. 15 to finish the job.

Bonus early tip #2: You still can find 2019 return filing tips on the ol' blog's Filing Season Tax Tips that are collected on their monthly pages: January, February, March, April, May, June and (whew!) July.

Other folks face another type of tax clean up. They need to file an amended tax return to fix some errors they discovered, maybe when sorting through all those aforementioned tax statements.

And, of course, there's tax planning for the 2020 tax year so that next year's filing process won't be as much of a hassle or as costly.

Once a week through 2020: Sorry if you're starting to freak out about taxes again, right after we've wrapped the main filing season. I didn't mean to alarm you. In fact, this page is where you'll find tips to help you get through the rest of 2020 and tax tasks you may still face.

As in previous years, a new piece of tax advice will be featured here each week, usually each Friday. I know, it's a perfect lead-in to weekend tax reading!

And again as n previous tax years, the tips collected on this special page also first will be featured in the upper right corner of the ol' blog.

Regardless of whether you're looking for some tax advice to help file your extended return or save on 2020 taxes, regularly check the top of the blog page and bookmark this one for help. The weekly tips will continue until the end of this year.

Since Christmas this year is on a Friday, and it's the last Friday of the year, I'm thinking, at least right now that the final Weekly Tax Tip of 2020 will be pushed to the following Monday, Dec. 28. That way you'll have a few business days left in 2020 to take care of what I suspect will be a reminder of year-end tax moves to make.

Also, don't be surprised if a stray weekly tip or two also shows up in the opening weeks of January 2021 before I transition to the New Year and the return of the 2021 Filing Season Tips.

But I'm getting way ahead of myself. There's lots of 2020 left. So back to now, the middle of July, and this year's Weekly Tax Tips!

  1. Didn't file on Tax Day? Do this now — Did July 15, the COVID-19 delayed Tax Day 2020, slip by you? Don't panic. But do make these tax moves as soon as possible to stop or reduce any late-filing and non-payment penalties. (July 16, 2020)
  2. 16 states have scheduled sales tax holidays — The national debate over when and how schools will resume this fall continues as the coronavirus resurges across much of the country. Meanwhile, 16 states are counting on (hoping) things will be safe enough for shoppers to participate in their annual back-to-school sales tax holidays this summer. Alabama kicked off the tax holidays on July 17-19. Two more start the end of July, with the other 13 in August. Make your lists. Shop safely. (July 17, 2020)
  3. Tax record keeping tips — Is all the material you used last week to file your 1040 still stacked up in a pile? Time to go through it and save the crucial tax documents. Here are some record keeping tips and what tax material to keep and for how long. (July 24, 2020)
  4. Hurricane season heating up: Prepare now! — Hurricane season 2020 got off to an early start and as July arrives, it's picking up steam. Hurricane Isaias, the earliest "I" name since 2005, could affect Florida's east coast and then North Carolina. Time to prepare! (July 31, 2020)
  5. Mid-August tax holiday flurry — The bulk of the 2020 sales tax holidays are the Aug. 7-9 weekend. If you head to stores in Florida, Iowa, Missouri, New Mexico, Ohio, Oklahoma, South Carolina, Texas and Virginia, be sure to follow coronavirus precautions. The same advice holds for Tennessee residents getting tax-free restaurant food and Marylanders who have a week (Aug. 9-15) for their back-to-sales tax holiday shopping. In addition to your health protection measures, safeguard your bank account with these tax holiday shopping tips. (Aug. 5, 2020 Bonus Tip)
  6. Home office tax deduction rules — The coronavirus pandemic has meant millions of us now do our jobs from home. But that doesn't mean every new work from home (WFH) employee gets to claim the home office tax deduction. In fact, the Internal Revenue Service expressly says if you're getting a salary for your WFH efforts, you're not eligible for this tax break. Here are the other rules about who can and can't write off a home office. (Aug. 7, 2020)
  7. Tax notice types and tips — It's rarely fun getting an Internal Revenue Service notice, but don't freak out. First, determine just what the IRS wants by looking at which type of tax notice you received. Then follow these 10 steps to deal with the tax agency's inquiry. (Aug. 16, 2020)
  8. RMDs can be reversed by Aug. 31 — Among the COVID-19 consequences is the waiving of required minimum distributions (RMDs) for 2020. If you made a required retirement account withdrawal before this law took effect in late March, the IRS says you have until Aug. 31 to reverse that RMD. (Aug. 21, 2020)
  9. Added COVID cash on way to some spouses and tax refund recipients — The coronavirus pandemic has royally messed up tax season 2020, but as the year winds down its effects are providing a bit more cash for some. Joint filers who filed injured spouse claims are getting catch-up COVID-19 payments. Plus, COVID-created tax refund interest payments are going to nearly 14 million filers. (Aug. 28, 2020)
  10. Tax breaks that can help cover educational costs — If you or your parents are paying for upcoming semesters, it's time for some educational tax incentives homework. Uncle Sam's various tax-favored credits, deductions, savings options, scholarships and even employer assistance can help pay many school bills. (Sept. 4, 2020)
  11. Tax value of your donated household goods — If you've spent at least a part of your COVID-19 self-isolation cleaning up and cleaning out your house, consider donating items you no longer want or need. They could help out your favorite charity, be welcomed by many thrift store shoppers and possibly give you a tax deduction at filing time. Just be sure to value your donated household goods accurately and fairly. (Sept. 11, 2020)
  12. Inventory your property before disaster strikes — The historic 2020 Atlantic/Gulf of Mexico hurricane season started early and shows no signs yet of slowing, so don't let up on storm preparation. That process includes taking a pre-disaster inventory that can help when you file insurance and/or potential tax deduction claims. (Sept. 18, 2020)
  13. Sept. 30 is dependent EIP deadline — Get government benefits? Have kids? You get one more chance to claim added COVID cash, but it expires on Sept. 30. (Sept. 23, 2020)
  14. Small business get COVID-19 tax credit help — COVID-19 has hammered small businesses. But the coronavirus pandemic also prompted creation of the Employee Retention and Paid Sick and Family Leave tax credits that can help companies and self-employed individuals cope with the health crisis' unexpected costs. (Sept. 25, 2020)
  15. Using medical account money to cope with COVID-19 — Does the coronavirus pandemic have you stressing? If you have a tax-favored medical savings option, such as a flexible spending account (FSA) or health savings account (HSA), those funds could help pay for ways to ease your anxiety. Here are 10 suggestions. (Oct. 2, 2020)
  16. 8 tax tips to meet the Oct. 15 filing deadline — If you got a federal tax filing extension earlier this year, your time is almost up. The due date for your tax year 2019 Form 1040 (and probably your extended state taxes, too) is Thursday, Oct. 15. Here are some tips to help you get it all done by this final deadline. (Oct. 9, 2020)
  17. When Social Security is taxable — Good news if you're getting Social Security benefits. Your monthly payments will be a bit bigger in 2021. But if you still need to supplement your federal retirement benefits, be careful. In some cases, those added earnings could make part of your Social Security payments taxable. Check out when that happens and a couple of the tax forms that are involved. (Oct. 16, 2020)
  18. 7 tips for a safe and tax-smart benefits open enrollment season — We're in the midst of employee benefits enrollment time at most companies. It's the annual chance to make any changes to workplace enticements like tax-favored health insurance, child care and medical savings accounts and retirement plans. These tips can help you maneuver and maximize this employer-provided benefits enrollment period, especially in this time of COVID-19. (Oct. 23, 2020)
  19. Don't overlook tax ballot initiatives — Yes, voting for president and your other government officials is important. But you also likely will see a ballot question or two when you cast your vote on Nov. 3. And several of them are tax-related. Here's a look at 2020's tax ballot measures. (Oct. 30, 2020)
  20. Time to adjust your payroll withholding — With the year winding down, if you got a big refund or owed a lot at when you filed your taxes, now is the time to fine tune your Form W-4. With just two months left, you can adjust your payroll withholding to have more or less income taxes taken out each pay period. This paycheck checkup will help you get to the most accurate withholding amount, especially if you use the Internal Revenue Service's online withholding calculator. But do so soon, so that any withholding adjustments will be spread out over several paychecks and thereby not so dramatically noticeable. (Nov. 6, 2020)
  21. IRS help for those facing COVID money & tax troubles — Are you struggling with your finances because of COVID-19? The IRS has a new coronavirus-inspired program, the Taxpayer Relief Initiative, that could make it less painful to pay any tax you owe. (Nov. 13, 2020)
  22. Filling out the FAFSA — Education has been dramatically altered during the coronavirus pandemic. One thing hasn't changed, though, when it comes to higher education. College costs a lot. Financial aid can help cover those expenses. The FAFSA, as the Free Application for Federal Student Aid is popularly known, is the best way to find money to cover the costs. Here's how to get the tax information you need to fill out FAFSA. (Nov. 20, 2020)
  23. 10 December Tax Moves — Since you've probably got fewer (and by fewer, I mean no) holiday parties to attend due to COVID-19 pandemic precautions, you've got more time to make some potentially money-saving tax moves this month. Here are 10 tax tasks that you should consider before Dec. 31 arrives. (Dec. 5, 2020)
  24. 6 Unemployment Q&A — The number of people seeking unemployment benefits jumped this week. The money obviously helps when you've lost your job. But remember, it is considered taxable income. These 6 questions and answers look at that component and more regarding the federal out-of-work assistance. (Dec. 11, 2020)
  25. WOTC benefits companies as well as workers — It's been a terrible year for companies and workers, but if you're able to hire new staff, consider doing so by year-end and adding an employee who can help you get a business tax break. Hiring workers who are in specific employee groups, including military veterans, could help you qualify for the Work Opportunity Tax Credit (WOTC). But you need to add to your staff soon, specifically by the end of the year. (Dec. 18, 2020)
  26. Boxing Day tips, tax and otherwise — 2020 has been a tough year. If you're able to help out folks who are less fortunate than you on this Boxing Day or after, here are some ideas of how to do so. And if you make your charitable donations by Dec. 31, your gifts could turn into tax-deductible presents for you next return filing season. (Dec. 26, 2020)

                                                         Happy New Tax Year 2021!
                                 The January 2021 Tax Tips are now live at their own page.


  27. 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)
  28. Reporting your winnings to the IRS — Uncle Sam apparently is Lady Luck's cousin. Your lottery jackpot, other gambling winnings and prizes, too, are taxable income. Here's how to report them to the Internal Revenue Service on Form 1040's Schedule 1. (Jan. 11, 2021) 

~~~~~~~~~~~~~~~

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Weekly Tax Tip

  • Reporting your winnings to the IRS — Uncle Sam apparently is Lady Luck's cousin. Your lottery jackpot, other gambling winnings and prizes, too, are taxable income. Here's how to report them to the Internal Revenue Service on Form 1040's Schedule 1. (Jan. 11, 2021)

  • Tax Tip; click pencil for all tax tip links

  • Check out all the latest post-Tax Day tax advice in the 2020 edition of Weekly Tax Tips. Many of these once-a-week tips will focus on planning moves to cut your 2020 tax bill.
    If, however, you got an extension and are still working on your 2019 return, you can get a refresher of the 2020 Filing Season Tax Tips at their respective monthly pages:
    January, February, March, April, May, June and July.

COVID-19 & Taxes

  • COVID-19
    Coronavirus has wreaked havoc
    on the 2020 tax season.
    This Coronavirus (COVID-19) & Taxes page has details.

All About Kay

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

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  • Tax Season 2021 is here!
    Happy New Tax Year! Are you ready to file your 2020 tax return? Me neither. With all the delays last year due to COVID-19, it seems like that prior tax season just finished. But time and taxes wait for no taxpayer. The Internal Revenue Service, which started 2021 by delivering more coronavirus economic relief payments, says it will be ready for our returns. So let's get prepared, too. The monthly tips and reminders a little further down this column should help us focus on our taxes and make the filing of them by go more smoothly. Also keep an eye on the countdown clock just below. It will help us keep track of how much time we have until Tax Day on April 15, just in case some of us want to put things off until the final hours. .
    Note: I'm in the Central Time Zone, so adjust accordingly for where you live.


Time for Tax Tasks


  • monthly tax moves

  • Oh, 2021. I cannot tell you how happy we are to see you. You will be better than 2020, right? Right?!?

    via GIPHY

    And just so there's no confusion, that's a question New Year 2021, not a challenge. So don't you dare try to outdo the just-past Year of COVID-19 and its many, many complications, including in the tax world.

    Jan. 1: While there's some good news with vaccines going out to fight the coronavirus pandemic, we'll still be dealing with it for a while. The Internal Revenue Service is delivering the second round of relief payments and the commissioner promises that the agency will start the 2021 filing season as usual later this month. I hope that's correct, but we shall see.

    Jan. 4: If your job made it through the tough last year, good for you and your company and welcome to the New Year's first work week. It's the perfect time to refine your payroll withholding. This is particularly applicable true for federal employees, including members of the military and even IRS personnel, whose withholding was suspended that last few months of 2020. That money must be paid to Uncle Sam, but a new late-year law says the repayment isn't due until the end of 2021. Adjustment withholding now will give you 52 weeks to spread it across, making the per-paycheck bite less painful.

    Jan. 7: The IRS' online withholding assistant or your tax pro can help you with your withholding amount and other tax numbers, but it's also a good idea going into a New Year to have an idea of your tax bracket and income tax rate. The rates tend to hold steady (until Congress starts fiddling!), but the brackets are adjusted annually for inflation. You can check out the 2021 income brackets (and 2020's for comparison) in the first post in the ol' blog's annual inflation series. At the end of that item, you'll find a directly to the other nine inflation items.

    Jan. 11: Continuing coronavirus precautions mean some restaurants are still closed for in-house dining. Other eateries are managing with take-out meals and deliveries. Whether you're able to enjoy table service in or getting food brought to your house, remember to tip your server or delivery person.

    restaurant check tip iStock
    If a tip isn't included in your food delivery charge, click the image above to calculate how much to tip the person who brought it to you.

    As for servers who are still on the job, remember that your tips are taxable income. If you at least $20 in job-related gratuities last December, you need to account for them today by using Form 4070 to report your tips today to your employer.

    Jan. 13: Did some of those tips come from a side hustle? That's just one of the tax matters to think about when you are part of the gig economy. In these freelance or contractor situations, you'll need to pay estimated taxes.

    Jan. 15: The final estimated tax payment for the prior year, 2020 in this case, is due today. The other three payments are for earnings in 2021 that aren't subject to withholding and are due on April 15, June 15 and Sept. 15. And be sure to account for your self-employment tax in figuring your estimated amounts.

    Jan. 18: Many people spend Martin Luther King Jr. Day each year as a day of service.

     MLK Day 2020 logo
    Click image to find out ways
    you can volunteer on MLK Day.

    Taking time on Dr. King's holiday to volunteer at a charity isn't tax deductible, but some costs associated with volunteering could help reduce your tax bill if you itemize. Most filers, however, claim the standard deduction and a new tax law gives them a tax break, too. On your 2020 return, you can claim up to $300 in donations directly on your Form 1040. In 2021, the $300 amount remains, but is doubled for couples who file jointly.

    Jan. 21: If the IRS meets its usual timetable, the annual tax-filing season will start soon. If you can get your tax material together, then there are several good reasons to file your return early.

    Jan. 25: Millions of filers find electronic tax options are great ways to get returns to the IRS as soon as possible. The tax agency agrees. In fact, for almost two decades, the IRS has partnered with the Free File Alliance to offer eligible taxpayers access to online tax software and e-filing through the aptly named Free File site at IRS.gov.

    IRS Free File; click image for details

    Last year, Free File was available to filers with adjusted gross income of $69,000 or less, regardless of filing status. That threshold has been bumped up to $72,000 for this filing season. If you're eligible, be ready to log-on when Free File officially opens, which usually around this time.

    Jan. 29: Of course, regardless of how you file your taxes, you can't do so until you all the necessary documents, such as W-2 and 1099 forms. Employers have until the end of the month (or Feb. 1 this year since Jan. 31 falls on Sunday) to get the to you, so be on the lookout for all the documents you need to file.

    Small Business Tax Calendar: Important filing, deposit and record keeping dates throughout the year that your company needs to know. You can get more tax calendar information at the IRS' online calendar page and view the full year's important business and individual tax dates in IRS Pub. 509.

State Tax Help

  • Don't forget your state taxes!
    Forty-three states and D.C. collect personal income taxes. But even if you live in of the seven states without an 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 Fiesta! page.

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Mapping Your Tax Route

  • Do you get lost doing your taxes? Check out the Taxpayer Advocate Service's Taxpayer Roadmap.

    Taxpayer Advocate Taxpayer Maps 2019

    This publication, designed along the lines of a subway map, shows the many routes and detours of a taxpayer's journey through our elaborate Internal Revenue Code and the Internal Revenue Service's enforcement of our tax collection system.

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  • You can read more
    of Kay's tax insights in ...


  • Kay Bell helps you build
    a solid tax foundation in
    "Personal Finance: An Encyclopedia
    of Modern Money Management"




    Kay Bell breaks down taxes and
    estate planning for millennials in
    "Future Millionaires' Guidebook"



    A collection of Kay Bell stories
    is included in
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    How to Keep More
    of What You Win"




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I gotta tell ya ...

  • AKA Disclaimer:
    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 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. It is not a recommendation of any specific tax action(s) you should or should not take. Similarly, mentions of products or services are not endorsements. In other words, my ramblings on the ol' blog are free advice and you know what they say about getting what you pay for. That's why when it comes to filing your taxes, I urge you to get additional, professional, paid-for guidance from an accountant, Enrolled Agent or other qualified tax preparer who is familiar with your individual tax circumstances.

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