Last year, the pandemic and natural disasters brought about changes in both life and tax law.
Deadlines, business reviews and tax brackets
“As of this writing, the professional filing season for federal tax filing is May 17th and for state tax filing June 15th,” said Catherine L. Dupuis, APAC.
Another important question concerns the stimulus payments received this year.
“You should claim your charm,” said Dupuis.
It’s technically a tax credit. The IRS does not add the amount to income, generate a greater tax burden, or reduce the refund.
“If you didn’t get your boom last year but you owed one, your tax return could be a means to achieve it,” said Dupuis.
“I think the biggest concern is that the laws are always changing,” said Courtney Jicks, area manager for the Jackson Hewitt Tax Service.
She has already completed 3,000 returns in Lake Charles alone. Some of them were early filers eager to get their refunds due to the impact of the COVID and the hurricanes on their personal finances.
The average refund, a figure announced by the IRS, is $ 2,929 this year.
“This is the biggest check some people have received in a year,” she said.
However, after many of those returns were filed, President Joe Biden signed the American Rescue Plan Act of 2021. The $ 1.9 trillion coronavirus relief act provides a tax break of up to $ 10,200 on unemployment benefits those who made less than $ 150,000 in 2020. More than a third of these 3,000 applicants spoke about the unemployment benefit received in 2020.
Usually the unemployment benefit has to be taxed.
“We have already received 300 calls from confused customers,” said Jicks.
The IRS will change returns filed on March 31st or earlier. Individuals (and married couples submitting couples together) who submitted after March 31st have completed or will complete a new form reflecting the change.
“It’s different for the state,” said Jicks.
Louisiana taxpayers who have not yet filed their 2020 state income tax should follow instructions on their resident or non-resident state income tax returns, depending on their residence status. Those who have already filed their state taxes will need to file an amended state tax return to reduce their Louisiana Adjusted Gross Income by the appropriate amount.
“It might be worth making changes if you owe state taxes,” Jicks said.
“When President Trump invoked the Stafford Act, it became a disaster area,” said Mike Terranova of the Terranova CPA Firm. “This of course opened doors for FEMA, but it also opened the doors to tax deductions for hurricane losses.
The items required to claim and document the deduction determined by your tax advisor include the Adjuster’s report and the cost base for the home. The cost base for the home is calculated based on the fair value before the damage and the fair value after the damage, a number that can be difficult to determine.
“The key to hurricane loss subtraction is having an accurate record,” Jicks said.
Even die-hard DIY enthusiasts may want to see an expert this year. For one, the IRS is secured. They are hard to get to.
“So far, the government has issued three separate press releases apologizing for its support. The usual processing time of 21 days is now 30 to 40 days. “
They fell behind due to COVID residency mandates.
If you plan to go it alone on filing, don’t miss the Earned Income Tax Credit. Like everything, it depends on income and the number of kids, but it’s for filers making up to $ 56,844 per year.
“Approximately one in five eligible taxpayers either does not claim the benefit or does not file their taxes at all,” said Jicks.
Financial troubles caused by the pandemic and hurricanes caused some to dive into retirement accounts.
“You have the option to spread the tax liability over three years,” said Jicks. “For example, if you withdraw $ 60,000, you will be claiming $ 20,000 over the next three years.
This could also result in a lower tax bracket and lower tax liability. Another factor that could make this possible is the broader tax brackets this year.
Over the years, the standard deduction has kept getting higher, which has not allowed people to use their donations for charity, Jicks said. “Under the CARES Act, you can only deduct $ 300 directly from your monetary donation on your 2020 tax return.
The “Review” is a tax break that allows taxpayers to use their 2019 Earnings Credit to determine eligibility for some of these new tax laws, credits, and other changes.
This article is not intended to contain every new change in filing taxes this year. Just to demonstrate more changes in the process than in previous years, even more than 2008, which Jicks said was also a memorable year in tax law changes.