Ready or not, a new tax season is upon us.
While tax season usually revs up in mid-January, the Internal Revenue Service (IRS) pushed the start of tax season back slightly to allow for additional testing of IRS systems and programming following the latest round of pandemic-related economic relief. The due date is not pushed back, however, and returns remain due on Thursday, April 15, 2021.
As tax lawyers, we understand the frustration and intricacies of filing individual returns, high-asset returns involving foreign bank accounts, and complex “S” corporation returns. Regardless of the type of return you are filing this year, here are some points to pave the way:
- Got children? For those who qualify for the Child Tax Credit (CTC) or the Earned Income Tax Credit (EITC), you can use your income from either 2019 or 2020 in order to receive eligible credits.
- Go paperless: The IRS has long signaled a move to electronic filings and direct deposit. This year the IRS predicts paper-filed returns and checks will take considerably more time. If you have not done so already, now is the time to go digital. Everyone should be concerned with data security. The IRS now offers the Identity Protection PIN Opt-In program to all taxpayers to avoid identity theft during tax season.
- Taxable income: Keep in mind unemployment income and wages earned at a gig job are taxable. Income from government stimulus checks is not considered taxable by the IRS.
- File your return (no really): Be sure to file an accurate return on time. You can always file for an extension. But do remember to file.
- Draws on retirement: Be sure to pay one-third of the tax due on any pandemic-related draw from a retirement account with your 2020 return if you are not intending to repay it within three years.
- A toast! While it won’t do anything for your tax return this year, from December 21, 2020 through December 31, 2022, a 100 percent business deduction will be allowed on food and beverages provided by a restaurant. That is a big improvement from the current business deduction of 50 percent.
As the pandemic wears into its second tax season, many companies and households remain financially stressed. When you need experienced advice about your individual or corporate return or options for your business, talk to an experienced tax attorney for help.
Strategic legal advice about tax controversy or IRS criminal tax audits
With offices located in Cleveland and Chicago, the tax lawyers at Robert J. Fedor, Esq., LLC answer your questions about business tax returns, employment tax disputes or concerns you might have about offshore tax investments, or your FBAR reporting. When you need experienced tax advice, call 800-579-0997 or contact us.
