Many individuals will be working to gather their tax documents to complete their 2020 taxes. Although the tax deadline was extended until May 17th, the deadline always seems to sneak up quickly. I know you may have a lot on your plate lately, so as we near the finish line of tax season, here are a few helpful reminders from the TurboTax team to help you save on your taxes and to help you file your individual tax return (Form 1040) on time.
- Don’t worry about taking your taxes somewhere. With everything that is going on, you don’t need to worry about going out and taking your taxes to someone to get them done when you can easily and accurately file from the comfort of your own home. Plus, millions of taxpayers may be eligible for TurboTax Free Edition if they file a simple tax return (Form 1040 with no schedules): that includes W-2 income, limited interest and dividend income reported on a 1099-INT or 1099-DIV, claiming the standard deduction, Earned Income Tax Credit, the Child Tax Credit, and unemployment income. With TurboTax Free Edition, new and returning users get free data transfer giving them up to a 50% head start while eliminating data entry, the ability to jump-start your taxes by snapping a photo of your W-2, free driver’s license barcode scan, free step-by-step guidance to help you claim the Earned Income Tax Credit and Child Tax Credit, free audit guidance, and proactive guidance related to events that happened last year.
- Gather your forms in one place. Nothing is worse than not having a form when you need it. Grab all of those income documents: W-2s, 1099’s and paperwork for tax-deductible expenses. Tax supporting forms that report student loan interest, education expenses for colleges, and mortgage interest will also be necessary if you’ve had any of those expenses. If you are self-employed, make sure you have your 1099-NEC or 1099-K forms. Also, remember if you are self-employed you may not necessarily receive a form 1099-NEC or 1099-K, but you still need to claim all of your income. Don’t forget, you can also claim your business expenses which will lower your taxable income.
- Pick a time and place. Pick a time and place that does not require you to be in a hurry. Rushing while doing your taxes can cause you to leave something out or enter information incorrectly. Make sure to verify dependents’ correct birth-dates and social security numbers. This basic information is required to claim valuable tax deductions and credits such as Earned Income Tax Credit (EITC), Child Tax Credit (CTC), or the credit for other dependents. If you were eligible for the first or second stimulus payments but only received a partial or none at all, you may be able to claim a recovery rebate credit when you file your 2020 taxes. Recovery Rebate Credits can increase your tax refund and lower the amount you owe.
- E-file with Direct Deposit. Last tax season close to 72% of tax filers received a tax refund, and the average direct deposit tax refund was close to $3,000! The IRS states that it will issue nine out of 10 tax refunds within 21 days or less when you e-file with direct deposit.
- Frequently overlooked tax deductions. Several tax deductions are frequently overlooked and can lower your taxable income and you don’t need to itemize your deductions to claim them. Some of the frequently overlooked deductions include: student loan interest deduction, teachers educator deduction for school supplies purchased up to $250, and deductible portion of your IRA contributions. Under CARES Act, the close to 90% of taxpayers that now claim the standard deduction instead of itemized deductions can now claim up to $300 in cash charitable donations made to a 501(c)(3) organization, so don’t forget your acknowledgements showing your cash donations even if you can’t itemize your deductions.
- Yes, you still may be able to itemize!: Although TurboTax estimated and the IRS data confirmed that about 90% of taxpayers now take the standard deduction instead of itemizing due to tax reform, gathering a few additional receipts for tax-deductible expenses may push you over the standard deduction and lower your tax liability. Review these items for a potential tax benefit:
- Previous state tax liability paid
- Charitable contributions – pro tip: TurboTax ItsDeductible will help you track and accurately value your donated items.
- Points paid to purchase a new home or refinance an existing home
- Get your tax refund. Even if you are below the IRS filing threshold ($12,400 single and $24,800 married filing jointly), you should still file a tax return especially if federal taxes were withheld and if you are eligible for a refundable tax credit like the Earned Income Tax Credit since you may have a tax refund waiting. The IRS reports about $1 billion in unclaimed refunds every year, and more recent data reveals the average unclaimed tax refund is close to $800.
- Tax savings for investors. If you are an investor and sold some losing stocks, don’t forget that capital losses on stock sales can be offset against capital gains, lowering your taxes. TurboTax Premier can help you accurately figure out your gains and losses and is the only major online tax preparer that supports importing over 1500 stock and 2,250 cryptocurrency transactions at once, directly from financial institutions, saving you time and ensuring accuracy. TurboTax Premier has partnered with hundreds of financial institutions and investment platforms to allow you to auto-import your investment info seamlessly when doing your taxes.
- Know 2020 tax relief provisions that will save you money. So much happened in 2020 and there were so many provisions passed that can help your overall tax picture like the tax-free portion of unemployment, relief on COVID related retirement withdrawals, and the suspension of paying back advanced premium tax credit owed to name a few. Keep these tax saving provisions in mind when you go to file your taxes. And don’t worry about knowing them all, TurboTax has proactive guidance related to the events that occurred in 2020 and the related provisions that passed so you can save money on your taxes.
- You can talk to a tax expert from the comfort of home. If you have tax questions you can connect live via one-way video to a TurboTax Live tax expert with an average 12 years experience and get your tax questions answered from the comfort of home. TurboTax Live tax experts are available in Spanish and English, year round and can even review your tax return.
What are you waiting for? Start filing your taxes today, your refund is waiting! By going online to prepare your taxes, you can save time and money and can still talk to a tax expert if needed.