In a normal year, the Internal Revenue Service (IRS) would have issued a start date for the tax filing season. Not this year though!
The economic disruptions of 2020 will get reflected in the tax returns filed, reshaping people’s typical patterns and changing their usual tax refunds. Many people will need to file tax returns to get the balance they are owed for stimulus payments. Others will have to pay taxes on their unemployment insurance benefits, while some others will face the complexities of state-tax rules for remote work.
Even though the start date of the tax filing season hasn't been announced yet, there are helpful tax moves you should consider now. Like what?
Brush up on your tax knowledge. Preparing your taxes shouldn't feel like reading a foreign language textbook. Take a fun, 3-minute, quiz-based Tax lesson on Finny (see the gif above if you're new to this), refresh on tax jargon, and learn new ways to save on your tax bill. (By the way, when you learn on Finny, you can earn rewards!)
Every year, the IRS adjusts more than 40 tax provisions—from income tax brackets, standard deductions to credits and exemptions—for inflation. Be sure to check relevant updated figures and don't forget that...
- Contribution limits to retirements plans are unchanged from 2020
- If you received unemployment benefits in 2020, they count as income and must be reported
- If you took money out of a retirement account before age 59.5 to help cover your costs during the pandemic, you have three years to pay that back without penalties
Start collecting your tax forms and supporting documents now. Don't underestimate how long it'll take to gather all the forms you need to file on time. A quick hack here is to pull out a copy of your 2019 return and make a list of things you need for your 2020 tax return. And if you want your refund fast, get your returns in ASAP as the IRS is still dealing with returns from last year.
Individual tax returns and extension requests are due on April 15 for the 2020 tax year. This is also the last day to contribute to a traditional or Roth IRA for the 2020 tax year. Good luck!