The effects of COVID-19 have caused financial burdens to many taxpayers across the nation this year. The pandemic took many taxpayers by surprise. However, the COVID-19 financial burdens are a reminder to taxpayers to stay on top of their finances!
At Lifeback Tax, we specialize in tax resolution. Although resolution is our primary focus, we are also adamant that we provide long term financial solutions for our clients. In this article, we discuss some key points, as per the IRS' advice. Our team has compiled a short list of tips that may help businesses and individuals ensure a prosperous financial year.
Tax Tips: Charity Deductions
Good news-- individuals who have made donations to qualifying charities in 2020 will be rewarded! In previous years, charitable donations could only be deducted if they were itemized. However, COVID-19 has changed this rule. Whether a taxpayer has made a charitable donation to COVID-19 aid, a natural disaster relief fund, or to a charity of their own personal choice, the IRS will grant deductions of up to $300 for tax year 2020.
Tax Tips: Recovery Rebate Credit
Qualifying taxpayers who received an Economic Impact Payment (EIP) may be eligible for the Recovery Rebate Credit. In order to claim this credit, taxpayers must have either not received an Economic Impact Payment or received an EIP of under $1,200 (under $2,400 if married filing jointly for tax years 2018 and 2019) and an additional $500 for each qualifying child. Additionally, taxpayers who expect to receive this credit should keep their IRS Notice 1444 with their 2020 tax records.
The Recovery Rebate Credit, initiated as a result of the CARES act, will be available to taxpayers in the upcoming tax year. Taxpayers who qualify for this credit will not need to fill out any additional information on their 2020 refund; if an individual is eligible for the credit they will automatically receive it.
Tax Tips: Refunds
The IRS advises taxpayers not to rely on receiving their refunds in a timely matter. Due to each taxpayer's case being unique, the IRS may take more time to process certain refunds. As online security measures increase, the IRS continuously adapts to these new measures. The official IRS website has a secure online tool that allows taxpayers to file their returns online.
Tax Tips: Interest On Taxable Refunds
Some taxpayers may have received a 2020 federal tax return that included interest. The IRS expects said taxpayers to report the interest received on their federal income tax returns. As an added measure, the IRS will begin sending out Form 1099-INT to taxpayers who received any amount of interest of over $10.
Rajneet Kaur, EA, MBA, Certified Tax Resolution Specialist is the Company Director of LifeBack Tax. LifeBack Tax is a tax resolution firm based in Chatsworth, CA that specializes in determining structured solutions for clients who owe back taxes to the state or IRS. With over 16 years of experience in the industry, Rajneet and her team have been able to resolve state and IRS debts for countless clients across the nation! To get in contact with Rajneet and the LifeBack team, call (855) 605-1500 or send an e-mail to [email protected]