4 Important Tips For Filing Your Taxes This Year

This year, there are some essential things you need to know when it comes to filing your taxes. The current pandemic, as well as the legislation around it, has resulted in some significant tax changes that you should know about.

Tip #1: Small Charitable Deductions Don't Require Itemization 

Charitable deductions have seen a few different changes over the last decade. This year, you can reduce your taxable income up to $300 if you donated up to that amount to charity. You can claim this deduction without itemizing your deduction, which has been necessary to claim a charitable deduction of any size. This new change was meant to encourage more people to donate to a charity that may otherwise not donate because they would have to itemize their deductions.

Tip #2: E-File

If you qualify for a refund, you should seriously consider e-filing your tax returns instead of submitting a paper return. When you e-file and sign up for a direct deposit, you should get your refund deposited into your account with a matter of weeks. E-filing allows your return to be reviewed and accepted at a faster rate and will allow you to get access to your refund sooner.

Tip #3: File for Free

If your adjusted gross income is below $72,000 and you have a simple tax situation, you don't need to pay for assistance with your taxes. There are lots of programs that will allow you to file for free.

If you have a more complex tax situation, you will want to get assistance with filing your taxes even if your AGI is below $72,000. For example, suppose you have investment income, mortgage deductions or various sources of income. In that case, it makes sense to have someone help you with your taxes so that you can ensure you are not overpaying on your taxes, which is possible with a complicated tax situation.

Tip #4: Missing Stimulus

If you didn't get a stimulus check or your check was reduced when it shouldn't have been, you can still benefit from the stimulus check situation. You can fill out a Recovery Rebate Credit on your taxes. This will allow you to claim a credit on your taxes. If you owe taxes, the rebate credit can be used to reduce the amount of taxes you owe. If you don't owe any taxes, you will get your missing stimulus money added to your tax rebate.

Each year, there are changes to the tax code, which is why it makes sense to work with a tax professional on your taxes. They will make sure that you take advantage of any tax changes that apply to you so you don't overpay your taxes.

To learn more, contact a tax preparation consulting company.