3 Things to Know Before Filing Your 2020 Taxes
It’s time again to file your taxes! This year’s tax season will be slightly different than last year, but don’t worry—we’ve pulled together the top three things to keep in mind before you file your taxes for the 2020 tax year.
1. File Online
If you normally prepare your taxes on paper and file them by mail, consider filing online this year. Online tax preparation software is available, and it’s very easy and user friendly to use. It’s also much faster—your tax returns will be accepted on average in 21 days, compared to paper filing which takes 6-8 weeks to be accepted.
Make the process even faster by using direct deposit as a means to collect your tax refund. Waiting for the IRS to cut you a paper check will leave you waiting even longer. Once you’ve filed online, you can track the status of your federal returns here and your Maine state return here.
Pro tip: If your 2020 income was under $72,000, you can file your federal taxes online for free with the IRS’s FreeFile.
2. Check Important Dates
Because the IRS has been busy processing the second round of stimulus checks, the date you can start to file your taxes this year was pushed back to February 12, 2021. Normally, tax season starts in late January after businesses have sent W2s and other organizations have sent appropriate tax forms to individuals.
Along with the date to start filing starting later than normal, the due date for filing your taxes has been extended to May 17, 2021. Last year, the deadline was pushed back to July 15 to accommodate the IRS processing the first round of stimulus checks. Here are more important dates to remember:
- February 12, 2021: tax season started; IRS began processing tax returns
- February 22, 2021: the IRS’ Where’s My Refund tool was updated
- March 1-5, 2021: refunds started to reach those who filed online, with direct deposit and who claimed EITC (Earned Income Tax Credit) and ACTC (Additional Child Tax Credit)
- May 17, 2021: deadline for HSA, IRA and retirement account contributions
- May 17, 2021: deadline to complete and file your federal and state taxes
- October 15, 2021: deadline to file for those who requested an extension
3. Stimulus Checks
As part of the 2020 CARES Act, a majority of Americans received economic impact payments (more commonly called stimulus checks). There have been two rounds of payments: the first round began last spring, and the second started in late winter.
When you file your 2020 taxes, you’ll be asked about the “Recovery Rebate Credit.” The Recovery Rebate Credit is meant to see if you received any or all of either of these stimulus payments, and if you have not, you may be able to claim them as a refund on your taxes. It’s important to note that these payments are not taxable, meaning you cannot claim them as income.
Pro Tip: File early to prevent potential scammers of committing identity theft or fraud.
With these things in mind, we suggest that you start the filing process as soon as possible. If you had major life changes last year that drastically change your filing process, consider getting advice from a tax preparer. Act fast, though, as tax preparers will be helping many people virtually this year and may affect available appointments. If you’re still feeling uneasy about doing your taxes this year, check over our Tax Time Checklist and reach out to us for more guidance. You can always bank on us.
Auburn Savings Bank does not provide tax, legal or accounting advice. This material is for informational purposes only and is not intended to be taken as tax, legal or accounting advice. Please consult a qualified tax professional before engaging in any transaction. Source: nerdwallet.com, irs.gov, turbotax.intuit.com