The year 2020 has been full of unprecedented circumstances, some of which may affect your tax situation. The more prepared you are, the easier it will be to file. Here is a look at what you can do to get ahead and be ready to file your taxes.
1. Gather your documents and tax forms
To save time when you file, begin organizing your tax documents and records as you receive them. The type of information you’ll need includes earnings and investment statements, unreimbursed medical expenses, loan statements, and homeownership records.
If you received an Economic Impact Payment (stimulus check), you might need Notice 1444, Your Economic Impact Payment, to calculate any Recovery Rebate Credit. If you’ve received unemployment compensation in 2020, that income will be reported on Form 1099-G.
For a detailed list of documents you may need, see our Tax Prep Checklist.
When will I get my tax forms?
The IRS requires that most tax forms be postmarked by January 31st, so you should expect to see your W-2, 1099, and other records by early February at the latest. Can’t find the documents you need? Here’s what you can do.
2. Review tax law changes
For 2020 tax returns (filed in 2021), you can deduct charitable cash contributions up to $300, even if you take the standard deduction. This deduction is per household. So, if you file as married (separately or jointly), the total amount you and your spouse can deduct is still limited to $300 total.
If you were eligible for an Economic Impact Payment (EIP) but did not receive one, or your payment was not for the correct amount, you may be able to claim this refundable tax credit.
If you are self-employed and had to take sick leave from your job, either for your own health or to care for a family member, you could receive a refundable tax credit to help make up for the loss in your income.
For tax year 2020 and going forward, the IRS is reinstating the use of Form 1099-NEC to report any compensation paid to non-employees by a company. Gig workers, contractors, and other non-employees will no longer use Form 1099-MISC to report self-employment income.
3. Prepare for unique situations
With a record number of Americans receiving unemployment compensation due to COVID-19, it’s important to understand the tax implications of those benefits. Unemployment income is taxable and is reported on Form 1099-G.
Due to the pandemic, many offices and businesses closed doors, and employees continued their work from home. It’s important to note that if you are a W-2 employee, the costs of setting up a home office are most likely not tax deductible because the Tax Cuts and Jobs Act eliminated the unreimbursed employee expenses deduction in 2018.
The IRS completely redesigned Form W-4 in 2020 so that it better aligns with the Tax Cuts and Jobs Act. If you choose to update your withholdings, you’ll notice that the new form includes a more simplified 5-step process and you’re no longer asked about personal allowances.
4. Bookmark important info
Keep our 2021 Refund Schedule on your radar. This calendar provides estimated refund delivery dates based on when you submit your return to the IRS.
And finally, if you don’t have an existing account with TaxSlayer, create one for free. When you file with TaxSlayer, all the tax law changes are already accounted for in the software. Simply enter your information and let TaxSlayer do the calculations. Your return is guaranteed accurate, and you’ll get the maximum refund you deserve. Log in to get started filing.