Tax filing season can be one of the most stressful times of the year and there are many items that taxpayers need to consider when filing. One thing that is important to know before submitting your tax return to the IRS is which credits to claim and what deductions to take. These items can make the difference between owing a tax balance and receiving a tax refund.
Optima Tax Relief reviews key items individuals should know when filing their 2020 tax return.
Recovery rebate credit
Some taxpayers may be eligible to claim a recovery rebate credit if they meet the eligibility requirements in 2020. Here’s how to know if you qualify:
- They didn’t receive an Economic Impact Payment in 2020.
- They are single and their payment was less than $1,200.
- They are married, filed jointly for 2018 or 2019 and their payment was less than $2,400.
- They didn’t receive $500 for each qualifying child.
Refund interest payment
Those who received a federal tax refund in 2020 may have been paid interest. Individual taxpayers received interest payments from the IRS if they filed their 2019 federal income tax return on time and received a refund. Most interest payments were received separate from a tax refund. The interest payments are considered to be taxable and are required to be reported on 2020 federal income tax returns. Individuals who received interest payments by the IRS of at least $10, should receive Form 1099-INT, Interest Income.
New charitable deduction allowance
Taxpayers who choose not to itemize their deductions have the option to take a charitable deduction of up to $300 for cash contributions made in 2020 to qualifying organizations.
Additional refund-related reminders
- Taxpayers shouldn’t rely on receiving a refund by a certain date, especially when making major purchases or paying bills. Some tax returns may require additional review and processing may take longer.
- Refunds for taxpayers claiming the earned income tax credit or additional child tax credit can’t be issued before mid-February. This applies to the entire refund, not just the portion associated with this credit.
- The fastest and most secure way to get your refund is to opt for direct deposit and to file electronically.