We are now a few months into the year, which means it is officially the start of tax season. It may be a regular part of life, but filing taxes is still something everyone dreads. The ever-changing laws and regulations make it hard to know what to expect each year. This is why it is so important to seek help from experts. These are the four most important things you need to know for the upcoming tax season.
Filing Deadline Date
The filing deadline date is typically in the middle of April, but that all changed last year due to the coronavirus pandemic. The IRS gave everyone an extension because of the crazy world events happening at the time. While the pandemic is not over, the tax extension is not carrying over to 2021. You must have your taxes filed or in the mail by Thursday, April 15. Missing this deadline may subject you to late penalties.
Stimulus Check Payments
The vast majority of people in the United States received a stimulus check payment in 2020. Luckily, the IRS is not forcing anyone to claim this money as taxable income. This has been one of the biggest concerns among citizens over the last few months. The government structured the stimulus payments as a tax credit advance. Since tax credits are not taxable, you do not have to add the money to your income this year.
With a large portion of the country shut down for an extended period, many people received unemployment benefits last year. Figuring out what to do about your unemployment benefits can be really tricky, especially if you never received them before. Unfortunately, all of this money must be claimed as taxable income. This can potentially leave you with a much higher tax bill than initially expected.
Increased Standard Deduction
Tax deductions are used to lower your taxable income over the last year. Many taxpayers will be happy to hear that the standard deduction has gone up this year. The standard deduction last year was $12,200 for single individuals and $24,400 for married couples. Due to an increase in inflation, it will go up to $200 per person.