Tax season is always upon us before we know it, especially if you’ve been having an otherwise busy year. Instead of waiting until the last possible minute to get your taxes done, it’s a smart idea to get started early and work with the best tax service in Jamestown, ND. This is especially important because a lot of tax rules have changed, thanks to the coronavirus pandemic. Understanding what needs to be done will help you avoid scrambling as time runs out.
Here’s everything you need to know about the upcoming tax season.
Feeling overwhelmed right off the bat? Here’s the very basic information you should be aware of:
- Deadlines: As of December 2020, the tax deadline for 2020 taxes is April 15, 2021. If you don’t file by this date, you’ll be subject to penalties.
- Standard deductions: If you’re married, your standard deduction has been raised to $24,800 for couples filing jointly. Single folks or married couples filing separately can expect a $12,400 deduction.
- Brackets: Finally, the income tax brackets have been raised this year to account for inflation.
Coronavirus and taxes
The COVID-19 pandemic has done a number on most Americans, except for the very wealthy. Here’s what to think about before you sit down to do your taxes:
- Stimulus checks: The $1,200 per adult and $500 per child stimulus checks distributed are thankfully not taxable income. However, they do count as an advance against the tax refund you already would have received in 2021.
- Unemployment benefits: If you’re one of the millions of Americans who received unemployment benefits in 2020, keep in mind that you’ll need to pay income taxes on the benefits. If you didn’t sign up for income tax to be withheld, hopefully you set aside enough to pay your tax bill come April 15.
- Educational plans: If you have a 529 or ESA, you probably already know that the money must be spent on education expenses. If your college or program refunded all or part of that money, thanks to the pandemic and remote learning, you’ll need to put that money back in your account within 60 days, or face stiff penalties.
Deductions and credits
Deductions and credits can help you lower your tax liability or get more funds back in your return. Here are some to consider:
- Child: If you have kids, you can claim up to $2,000 for each child, and receive a refund of up to $1,400 per child.
- Medical: Spent a ton on medical bills in 2020? You can itemize and deduct medical expenses above 7.5 percent of your adjusted gross income.
- Charitable: If you were able to donate to charity this year, the CARES Act includes a provision to allow you to deduct up to 100 percent of your adjusted gross income, or $300 of charitable donations using the standard deduction.
As you can see, it’s important to understand the new laws and deadlines to get the maximum refund available. For the best tax services in Jamestown, ND, call Craig S. Hanson, CPA today.