Category: Tax News

Get up to date on all tax news from the IRS. The IRS is constantly updating us with law changes and new rules. Sometimes, it’s too much to keep up with. We’ll decipher the confusing lingo while you focus on staying current  on what’s really important.

If you have more questions about staying up to date with the IRS, leave a comment. Our tax team is ready to help!

Archive for the ‘Tax News’ Category

Tax-Deductible Donations to Ukraine

Posted by admin on May 11, 2022
Last modified: May 11, 2022

Maximize Tax Return through tax deductible donations to Ukraine

As the War in Ukraine escalates, appeals have gone out for financial and material support for the refugees who have fled to nearby countries. In response, many people are making generous donations to U.S. charities. To be tax deductible donations, these donations need to follow the rules for contributions to a U.S.-based 501(c)(3) charity for use abroad and gifts to a foreign charity. The Internal Revenue Service publishes a list of all eligible 501(c)(3) organizations on Publication 78. Unfortunately, direct donations to a foreign charity or donations made to a domestic charity that then hands over the funds to a foreign charity are not tax deductible donations to Ukraine.

Unfortunately, there are restrictions when it comes to tax deductible donations to Ukraine charities outside of the U.S. One way around these restrictions is to donate to Friends organizations in the U.S. that raise tax deductible contributions. Many Friends organizations support foreign colleges or universities, and they all have the same downside: you can’t earmark your donation for a specific foreign charity.

Another option is through International Donor Advised Fund. These are funds set up worldwide by certain foundations, mutual funds, and brokerage firms. They have one restriction in common: they can’t give specifically to foreign charities. That restriction is lifted with some International DAF’s like the United Way Worldwide. It’s important that you make sure their screening process for foreign charities is sufficient if you’re setting up a DAF.

The third option for those looking to make a significant gift is to set up a private foundation. The biggest downside of a private foundation is an excise tax on foreign grants. It’s easy to set up a private foundation if you are in the very high income bracket and want ultimate control over where your donations go to Ukraine. If the war ends quickly or drags on, there will be human costs outside of Ukraine and inside. You can create a tax deductible donation to Ukraine and not have to do too much work to help this cause.

New tax preferences to support Ukraine

The Ministry of Finance of Ukraine has come up with some new tax changes to help victims of the ongoing armed conflict. The amendments aim to subsidize the production and purchase cost of goods and rights. Of which are then donations for counteracting the effects of the armed conflict in Ukraine.

The proposed changes include, amongst other things, the deduction of expenses incurred for production or purchase price of goods and rights that are subject to a donation against the effects of an armed conflict on Ukrainian territory made during a period from 24 February to 31 December 2022.

tax deductible donations
tax deductible donations

Here are 4 tax deductions allowed under Ukrainian tax law

Documented tax deductible donations and givings

A registered resident taxpayer may deduct a limited amount of documented expenses for the expenses mentioned below, so long as the total amount does not exceed their annual taxable income. Any amounts not deducted from a taxpayer’s annual income cannot be carried forward to be deducted from future year’s profits. Therefore, all expenses should be properly documented.

Charitable Contributions for Tax Deduction in Ukraine

Caring for others is important. By contributing to registered Ukrainian charities and not-for-profit organizations, you can deduct the money you donate from your taxable income. Unfortunately, you can only deduct a maximum of 4% of your annual taxable income.

Education Expenses for Tax Deduction in Ukraine

Expenses are incurred in the pursuit of higher education or in the pursuit of academic degrees. Parents who educate their children in Ukrainian institutions are eligible for tax deductions. The total amount of the deduction may not exceed 100% of annual general taxable income calculated as a salary.

Insurance Premiums for Tax Deduction in Ukraine

For 2022, the deductible amount on voluntary long-term life insurance or non-state pension insurance for the benefit of a taxpayer and his or her immediate family members has limits. For example spouse, parents, or children is limited to UAH 3,480 per month for the taxpayer. Although this limit may be higher if there are other persons insured from the same policy. The limit for payment related to the taxpayer’s immediate family members is half of the above monthly limit.

Mortgage Interest Expenses for Tax Deduction in Ukraine

Kudos if you’ve read this far. I wanted to make it as clear as possible that I’m not trying to talk down to everyone here. Unfortunately, not everyone will have time to read through full docs, so let’s keep it short and with less mumbo jumbo whenever possible.

Easy Tax Filing

Posted by admin on March 7, 2022
Last modified: March 7, 2022

Easy Free Tax Filing and Simple Tax Filing on PriorTax.com

When tax documents start to appear in our inboxes and pile up in our mailboxes, that can only mean one thing – the 2022 tax season is upon us. The 2022 tax filing season began on January 24th, when the IRS began to accept 2021 tax returns, so what can you do to ensure a simple and easy tax filing season this year through PriorTax.com?

What to prep in advance for easy tax filing and simple tax filing with PriorTax.com ?

PriorTax simplifies your tax filing, making easy tax filing possible. Otherwise you’ll want to have all of the relevant documents close to hand – either hard copies or PDFs will work, whichever is easier for you. So, do be sure to save all of those documents that you have been receiving via email and regular mail.

Remember that the primary purpose of gathering up all these documents is to ensure that you have all of your income information for 2021 to hand in order to accurately prepare your tax returns. This helps to minimize your tax bill and maximize your tax refund if you are owed one.

easy tax filing
easy tax filing

Depending on your financial and employment situation, your relevant documents should include two broad categories:

  • W-2 Forms that will detail information concerning your salaries, wages, and tips that you earn as an employee
  • 10099 Forms that will detail information concerning other sources of income. These are self-employment income and earnings like interest or dividends from banking and investment accounts

In addition to paperwork and information related to your income and expenses last year..

You’ll want to make sure that you have the following personal information:

  • Social Security and/or Taxpayer Identification Numbers as well as Birthdates for yourself, your spouse, and, if you have any, your dependents
  • Your Bank Account Number and Routing Number to receive your tax refund via direct deposit. (The IRS recommends filing electronically with direct deposit details to ensure an accurate return and quick refund processing.)

Easy Free Tax Filing for Single Filers Under 21

For those under 21 years old who need to prepare tax returns and are either single filers or married and filing separately, PriorTax.com offers a Free Basic Package for current year filing. This package can be an excellent choice for those who may be new to needing to file their tax return. Whether because you recently started your first job and/or started college.

The Basic Package uses PriorTax.com’s easy-to-use web application to help guide you through the process of submitting information about your

  • Wages,
  • Unemployment,
  • Interest,
  • and/or Dividends.

In addition, if applicable, this package can help you claim the Education Credit and/or Earned Income Credit (for filers without dependents). This ensures that you take advantage of credits available to you. This will help minimize your tax bill and maximize any tax refund you might receive.

If you’re currently in higher education, the Education Credit can help to reduce your tax bill. As an added benefit, if claiming the credit reduces your tax bill to less than zero, you may receive a refund on any taxes that were withheld from your paychecks in 2021.

You can claim an Education Credit when filing if you fulfill these requirements:

  • You or the 3rd party (family or friends) pay expenses related to your education (tuition, mandatory enrollment fees, and required course materials)
  • Enrolled at an eligible educational institution
  • The eligible student is listed on your tax return

The IRS doesn’t allow you to claim an Education Credit if you are listed as a dependent on someone else’s tax return. (Although they may be eligible to claim the credit on their return). College students can benefit from this credit by preparing and filing their tax return as single filers. PriorTax has a process that the Basic Package web application was designed to guide you through. 

More Simple Free tax filing options when you have easy tax filing obligations.

Even if your financial situation doesn’t allow you to take advantage of PriorTax.com’s Basic Package, don’t worry. There are still free tax filing options available to you. Visit the IRS’s website to take advantage of two options from the IRS Free File program.

If your adjusted gross income in 2021 was $73,000 or less, you could qualify for free guided tax preparation offers that will help you to prepare and file your federal tax return. And sometimes your state tax return too, for free. Use the PriorTax Customer Service to either inquire this year’s offers or to answer a few questions. IRS also provides Online Lookup Tool to receive a list of relevant offers. (Please note, with complicated IRS filing remember to create your account by accessing the IRS Free File provider’s website from the IRS website. This is to take advantage of the IRS Free File offer. The Free File program and commercial tax preparation offers from these providers are separate and not interchangeable.)

If your adjusted gross income in 2021 was more than $73,000 or you prefer to fill out and file taxes yourself, you can use the IRS’ Free File Fillable Forms. This option is available to all income levels. It provides free electronic forms for you to file out and file yourself. However, you’ll need to be comfortable using IRS forms, instructions, and publications as this option won’t offer any tax preparation guidance and only limited calculations.

PriorTax Top Tax Professional Support and Tax Packages for Easy Tax Filing

Looking for more assistance with your tax returns than Free File Fillable Forms can provide? If you don’t qualify for an IRS Free File Offer, consider one of the affordable and easy-to-use tax filing options at PriorTax.com. Like those free tax filing options, the easy-to-use web application works by asking you to answer simple questions regarding your work and financial situation and doing all the math for you. In addition to several different tiers of packages, you can either choose Complete Additional Services as a package. Or individually select additional services so that you only pay for what you need.

This tax season, visit PriorTax.com for easy tax filing and essential tax tips. We’re here to help with a range of resources and services to help you file your taxes. We can help whether you’re a student with simple tax filing obligations in need of our Basic Package to claim education credits on your return this year or you have a wide portfolio of business. It can also be personal income that could benefit from our Platinum Package and for any tax situation in between.

Free Tax Filing 2021

Posted by admin on February 24, 2022
Last modified: February 24, 2022

Ultimate Guide to Free Online Tax Filing and Free Federal Tax Filing

As things start to wind down for the year and 2021 comes to a close, it’s not too early to take a step back and make sure you have everything in order for the 2021 tax year. Setting aside just a few moments before year’s end to review your finances can pay dividends, metaphorically speaking, when the applications for free federal tax filing and free online tax filing come online next year.

First things first, remember that you file a tax return about what you earned in 2021 in 2022. Once 2022 comes around and the tax season starts, you’ll be looking back at the period from January 1 to December 31, 2021

So, what is one thing that should be on your financial checklist before we all ring in 2022?

Review your finances over the past year. Make a list of the documents, financial or otherwise, related to your income from 2021.

This includes documents related to your work, any investments you have, your health insurance, and any government assistance programs you’ve benefited from.

Paperwork you need to gather related to your income may include:

  • Form W-2
  • Form 1099-C “Cancellation of Debt” – Canceled debt is typically considered taxable income by the IRS.
  • 1099-G “Certain Government Payments” – These are forms related to unemployment income and state/local tax refunds.
  • Form 1099-MISC “Miscellaneous Income” – These are forms that may be sent to you related to a range of different types of non-employee compensation.
  • Form 1099-R “Distributions from Pensions, Annuities, Retirement, or Profit-Sharing Plans” – These are forms you may receive concerning payments/distributions from IRAs or other retirement plans.
  • 1099-S “Proceeds from Real Estate Transactions” – These are forms that will record income you earned from the sale of a property.

There’s more..

  • Forms 1099-INT, -DIV, -B, or Schedule K-1 – These are forms that will record your investment or interest income.
  • Form SSA-1099 – These are forms you will receive if you received Social Security benefits.
  • Documentation related to alimony payments you received
  • Documentation related to your business or Farming income, including profit/loss statement, capital equipment information
  • Info and Documentation related to any miscellaneous sources of income, such as jury duty, gambling winnings, Medical Savings Account, scholarships, etc.
  • Documentation related to installment sale information, including Forms 6252, principal and interest collected during the year, SSN, and address for payer
  • Documentation related to income and expenses from any rental property you own, including profit/loss statement, suspended loss information.
free tax filing 2021
free tax filing 2021

Paperwork and information you will need to gather that can help reduce your tax liability:

  • Form 1098-E “Student Loan Interest Statement” – These are forms for student loan interest paid. The loan statements for your outstanding student loans will also be relevant here.
  • Documentation related to alimony payments you paid
  • Info and Documentation related to any IRA contributions you made during the year
  • Documentation recording your contributions to your Health Savings Account (HSA)
  • Are you a student, or do you have student dependents? Form 1098-T for tuition paid and your receipts or canceled checks for tuition paid for higher education
  • Are you a teacher? Your receipts/canceled checks for expenses paid for classroom supplies, etc.
  • Are you an armed forces reservist, an employee with impairment-related work expenses,
  • .. or a fee-basis state or local government officials, or a performing artist? Your receipts/canceled checks for employee business expenses
  • Are you self-employed? Your records related to health insurance payments and payments in qualified self-employed pension plans such as SEP and SIMPLE

In short.

The paperwork you need will be the same for all options for free tax filing for 2021 tax returns. This is including if you take advantage of any of the free online tax filing options.

Having this information organized and to hand once 2022 arrives, and you begin to receive your financial documents. This ensures you have all the information you need when free online tax filing opens up for the 2021 tax year. What’s more, this will make you less likely to forget anything in your tax return. This will help you avoid triggering an unwanted audit from the IRS.

When can I start a free tax filing for the 2021 tax year?

Information about and the application for free federal tax filing and free online tax filing will come online in January 2022. So, keep an eye on the IRS “Free File: Do your Federal Taxes for Free”. Where all the details you need will be available.

Did you use a free online tax filing option in 2021 for your 2020 taxes? In which case, you may receive an email notification when their system has come online and is ready for submissions for the 2021 tax year.

Where can I find free federal tax filing options for the 2021 tax year?

Check the IRS “Free File: Do your Federal Taxes for Free” website in January to find options for free online tax filing with an IRS partner site or to use the IRS’s Free File Fillable Forms.

Remember that IRS Free File will only be available to file your current year tax return. Each year, the program runs from mid-January to mid-October. Once the 2022 tax season is over and the program closes for the year. If you still need to file your 2021 tax return you will need to file it as a prior-year return.

Visit PriorTax.com today for more helpful information about filing your taxes.

On our website’s Knowledgebase, you will find information on late tax filing. This answers many common general tax questions, and information on how to find the information you are looking for from the IRS or your local state’s revenue and taxation departments. Or keep up today with other posts on our Tax News Blog. Here you can find helpful and timely information about filing prior year taxes.

Use our helpful resources to be better equipped to take advantage of free online and free federal tax filing options next tax season. If you have a more complicated financial situation, we offer current year tax filing services in addition to our prior year services. We support you with unlimited live support by phone, chat, or email.

With our tools at your disposal, you can be confident that you are getting your taxes done right.

2021 Tax Brackets

Posted by admin on February 9, 2022
Last modified: February 9, 2022

Complete Guide to Tax Brackets 2021

As 2021 draws to a close and we look back at the year that’s been, let’s take a moment now to look at what the 2021 tax brackets mean for you and the money you earned over the past year.

What are tax brackets, and what are they used for?

There are seven federal tax brackets by the IRS to determine how much federal income tax you owe on any income you earned during the year. Each bracket corresponds to a percentage rate: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. 

The U.S. federal income tax system is a progressive tax system. This means that you are subject to higher federal income tax rates when you have higher taxable income. But, equally, you are subject to lower federal income tax rates when you have lower taxable income.

Calculating how much tax you owe will get complicated. How much tax you owe depends on which tax brackets for 2021 your total taxable income will fall into. Rather than finding the bracket and paying the corresponding tax rate on your entire taxable income, your taxable income is divided across all applicable brackets. Each subdivision is then taxed at the corresponding tax rate.

Why are there 2021-specific tax brackets?

Ahead of each tax year, the IRS publishes updated income ranges corresponding to each tax rate. This is to take into account inflation rates and is part of the wider inflation adjustments the IRS makes annually to sixty plus different tax provisions.

These adjustments are announced during the final quarter of the preceding year. For example, the changes for the current tax year, including the tax brackets, were announced on October 26, 2020. Taxpayers and tax professionals then use this information for taxes due in April 2022 (or in October 2022, when a filing extension has been requested).

What information do I need to read the 2021 tax brackets?

When looking at the 2021 tax brackets, you will need to know your total taxable income in 2021 and your filing status. Your total taxable income refers to the part of your gross income for the year that is subject to taxation. It will depend on your income tax filing status, the type of income you had, and your financial activity over the course of the year.

All U.S. taxpayers fall into one of five different filing statuses. The IRS uses this to determine your filing requirements, possible deductions and/or credits, and your tax rate. In determining your filing status, your marital status, your spouse’s year of death (if a widow/widower), and the contribution toward household expenses from members of your household. The IRS offers an online interactive tax assistant, “What Is My Filing Status?” on their website to help you figure out your filing status.

You will use these two pieces of information to identify where amongst the tax brackets your financial situation falls and what that means for your tax rate when it comes time to file your tax return.

With these details laid out, let’s take a look at what the tax brackets mean for each filing status and how you can use this information. Looking at the table for your filing status, identify the row corresponding to your taxable income range to determine how much tax you will owe.

Single Filers:

What do the 2021 tax brackets tell us about calculating the tax owed for single filers?

2021 Tax Brackets for single filers

Head of Household Filers:

What do the 2021 tax brackets tell us about calculating the tax owed for people filing as head of household?

2021 Tax Brackets for Head of Household Filers

Married Filers, filing jointly:

What do the 2021 tax brackets tell us about calculating the tax owed for married couples filing jointly?

2021 Tax Brackets for Married Filers Filing Jointly

Married Filers, filing separately:

What do the tax brackets for 21 tell us about calculating the tax owed for married couples filing separately?

2021 Tax Brackets for Married Filers Filing Separately

Looking for more tax tips to prepare you for the 2022 tax season? Then look no further than PriorTax.com. Visit today to keep up to date with important tax news. Learn more about our full range of tax filing services. PriorTax.com provides Free Tax Advice and have CPA or Professional Reviews available for certificate. Also check out our state of the art free Tax Calculator

We offer both prior year and current year tax filing services to help you keep on top of your income tax obligations past and present.

Stimulus Update

Posted by admin on January 25, 2022
Last modified: February 17, 2022

How to Update Bank Info for Stimulus Check &

How to Update Direct Deposit for Stimulus Check

Stimulus Update: 

With 2022 now underway but the pandemic ongoing, where do things stand with the U.S. government’s stimulus checks? Let’s break down things with a stimulus update and state of play. So that if you were eligible but haven’t received one or more of the stimulus checks, you’ll know what your next steps are.

stimulus check tax
stimulus check tax

How to get a stimulus check update for the first stimulus payment

You can log in to your individual IRS account on the IRS website to view a copy of Notice 1444. It will confirm information about the first stimulus payment issued. It appears under “Economic Impact Payment Information” on the Tax Records page with the IRS EIP letters for the second and third stimulus payments.

How to get a stimulus check update for the second stimulus payment

You can log in to your individual IRS account on the IRS website to view a copy of Notice 1444-B. It will confirm information about the second stimulus payment issued. It appears under “Economic Impact Payment Information” on the Tax Records page with the IRS EIP letters for the first and third stimulus payments.

How to get a stimulus check update for the third stimulus payment

The Get My Payment application on the IRS website is available to check the status of your third stimulus payment. Or you can log in to your individual IRS account on the IRS website to view a copy of Notice 1444-C. It will confirm information about the third stimulus payment issued. It appears under “Economic Impact Payment Information” on the Tax Records page with the IRS EIP letters for the first and second stimulus payments.

How to update address info for stimulus check

Did you incorrectly enter your address info or has your address changed and now need to know how to update your address info for stimulus check payments? Your address info for your stimulus check cannot be changed at this stage since the last payments have already been issued. If you didn’t receive your stimulus check.. You will need to claim the Recovery Rebate Credit on your 2021 tax return to claim your payment.

So, if you were wondering how to update your address info for stimulus check payments. Now you know that the IRS is no longer accepting corrections to your address for any of the three stimulus check payments from the federal government.

How to update bank info for stimulus check

Did you not have the correct information to hand and now need to know how to update your bank info for stimulus check payments? Your bank info for your stimulus check cannot be changed at this stage since the last payments have already been issued. If your bank info on file is invalid or the account closed, the bank will have returned the payment to the IRS. You may have had a check mailed to the address the IRS has on file for you. However, if you didn’t receive your stimulus check this way.. You will need to claim the Recovery Rebate Credit on your 2021 tax return to claim your payment.

So, if you were wondering how to update your bank info for stimulus check payments. Now you know that the IRS is no longer accepting corrections to your bank info for any of the three stimulus payments from the federal government.

How to update direct deposit for stimulus check

Did you not have the correct information to hand and now need to know how to update your direct deposit info for stimulus check payments? If your direct deposit info on file is invalid or the account closed, the bank will have returned the payment to the IRS. You may have had a check mailed to the address the IRS has on file for you. However, if you didn’t receive your stimulus check this way.. You will need to claim the Recovery Rebate Credit on your 2021 tax return to claim your payment.

So, if you were wondering how to update your direct deposit info for stimulus check payments. Now you know that the IRS is no longer accepting corrections to your direct deposit info for any of the three stimulus payments from the federal government.

To summarize, if you are still waiting on stimulus checks from the IRS, in most cases, you can’t make any changes or update the information the IRS has. With the end of the 2021 calendar year, the IRS has now issued the last of the stimulus checks for the first, second, and third Economic Impact Payments. Although you can no longer request stimulus checks or the reissuing of missing stimulus checks.. You CAN claim your missing payments by claiming a recovery rebate credit on your 2021 or 2021 tax return.

How to claim the first and/or second stimulus check payments

If you didn’t receive a first and/or second stimulus check or received less than the full amount. You may be able to claim the Recovery Rebate Credit by filing your 2020 prior-year tax return. Visit PriorTax.com to prepare and file your 2020 prior-year tax return today to take advantage of this tax credit and receive your missing stimulus payments. Before filing, you can use our comprehensive Prior Year 2020 Tax Calculator to see how you may be able to benefit from the Recovery Rebate Credit. As well as any other credits or deductions available to you.

If your 2020 tax return has already been processed, you can amend your 2020 tax return. We offer tax return amendment services for both current and new PriorTax customers.

How to claim the third stimulus check payment

If you didn’t receive a third stimulus check or received less than the full amount, you may be able to claim the Recovery Rebate Credit when you file your 2021 tax return. Visit PriorTax.com today to prepare and file your 2021 tax return, including claiming the Recovery Rebate Credit to claim your missing third stimulus payment. Before filing, you can use our comprehensive 2021 Tax Calculator. See how you may be able to benefit from the Recovery Rebate Credit as well as any other credits or deductions available to you.

File 2020 Taxes Online to Efile

Posted by admin on December 21, 2021
Last modified: March 10, 2022

Filing 2020 taxes online via Efile for maximum 2020 tax return

2021 has been a busy and sometimes overwhelming year. And many of us are glad to see it finally coming to a close. If the 2021 tax season completely passed you by, you may be wondering about your 2020 tax return online and filing a return for your 2020 taxes. 

First things first, is filing my 2020 taxes still possible?

file 2020 taxes online
file 2020 taxes online

Yes, you can still file your 2020 tax return. However, the deadline for filing 2020 taxes on time was May 17, 2021. Or, if you got an extension, the deadline for filing 2020 taxes was pushed back to October 15, 2021.

Since these deadlines have passed, the IRS will consider your 2020 tax return to be late. However, they continue to accept prior year tax returns, including 2020 tax returns. The prior year tax services at PriorTax.com offer a cost-effective option to get up to date on your filing obligations. Preparing tax returns for previous years while helping you to ensure you are always filing following the right tax regulations for the right year.

Is it too late to file my 2020 tax return and receive my stimulus checks?

No, it isn’t too late to get the money available to you from the Economic Impact Payments made available to help people out during the pandemic. If you didn’t receive your stimulus checks, there is still time to claim your payments as a tax credit and receive this money as part of your tax refund.

The stimulus checks were an advance payment of a federal tax credit, the Recovery Rebate Credit. So, you’ll need to file your 2020 tax return to receive your first- and second-round stimulus checks to receive this credit. And if you received your checks but less than the full amount, by filing your 2020 taxes, you may be eligible to claim the Recovery Rebate Credit.

Can I still file my 2020 taxes online?

Since the deadline for filing 2020 taxes has now passed, your 2020 tax return is now considered a prior year return. That designation comes with a few restrictions imposed.

You’re only able to make use of the IRS’s Free File program that lets people file their 2020 taxes online until the deadline. If you use a self-preparation website to file your 2020 taxes online, you will be able to prepare your tax return paperwork online. However, once it’s ready to send off to the IRS, you will need to print, sign, and then mail off your 2020 tax return to the IRS.

If you’re looking to file your 2020 taxes entirely online, consider using PriorTax.com’s CPA Review option, available when filing your 2020 taxes with us. By opting for a CPA Review, you receive a personalized consultation with one of your certified public accounts. They will help you take maximum advantage of all of the deductions and credits for which you may be eligible, helping to reduce your tax bill or boost your tax refund. Additionally, as tax preparers registered with the IRS, they can assist with e-filing your 2020 taxes.

What happens if I am late filing my 2020 taxes?

If you are late filing your 2020 taxes and are expecting a tax refund for 2020 taxes that you overpaid, you are leaving money on the table by not filing. You have three years from the original deadline to file your return and claim your refund.

If you are late filing your 2020 taxes and you owe the IRS money, the agency imposes financial penalties for late filing and for late payment of taxes. Unfortunately, these can make your tax bill even higher. That’s because you will start to accrue interest on your unpaid tax bill from the day following the filing deadline. This interest compounds daily, which can add up.

However, even if you’re not currently in a place financially where you can pay your full unpaid tax bill, it’s often a good idea to file your 2020 tax return sooner rather than later. The late filing penalty usually works out more expensive than the late payment penalty, so it is in your interest to limit the late filing penalty from adding up.

Why can going back and filing my 2020 taxes even if I don’t owe any money be a good idea?

If the IRS owes you a refund for your 2020 tax return, by going back and filing your 2020 taxes, you can receive your refund. There’s a deadline, and you’ll need to claim your refund within three years of the original deadline to file your return. So, you have until April 15, 2024 to claim your refund on your 2020 taxes. After that date, any unclaimed excess taxes paid by U.S. taxpayers go to the U.S. Treasury.

Before filing your 2020 taxes, you can visit the 2020 Tax Calculator on PriorTax.com to calculate your refund amount. There you will find free prior year tax calculators for 2011 to 2020. These are available to help provide a personalized view of income tax returns for any of the past tex tax years. Our tax calculators are entirely anonymous and don’t require an online account or entering any identifying personal information to use.

Additionally, because of the 2020 Recovery Rebate Credit and specific to filing 2020 taxes, if you did not receive the first and/or second Economic Impact Payments or think you qualify for more than you received, it can be a good idea to file your 2020 tax return. If you’re eligible for the 2020 Recovery Rebate Credit, you’ll need to file your return to claim it, even if you wouldn’t otherwise have a filing obligation.

Still need to prepare and submit your 2020 tax return? No need to panic!

Visit PriorTax.com today to learn how we can help you get up to date and how you can prepare to file your 2020 taxes online using our safe, secure, and easy-to-use system. Our experienced tax professionals can help you prepare your 2020 tax return with confidence. They are available to answer any questions you have along the way.

What’s New for the 2020 Tax Year?

Posted by Manisha Hansraj on January 15, 2021
Last modified: January 18, 2021
2020 tax year

Here’s the breakdown of all the changes.

Standard deduction

For the 2020 tax year, the standard deduction amounts have increased. Here are the amounts below.

  • Single or Married filing separately – $12,400
  • Married filing jointly and Qualifying widow(er) – $24,800
  • Head of Household – $18,650

For taxpayers who are blind or at least 65 years old, they can claim an additional standard deduction. The standard deduction is $1,300 and $1,650 for the single or head of household filing status.

Taxpayers who are both blind and of eligible age receive a doubled additional standard deduction.

Recovery Rebate Credit (Stimulus Payment)

(more…)

What is Form 1099-NEC?

Posted by Manisha Hansraj on January 11, 2021
Last modified: January 13, 2021
Form 1099-NEC

For the 2020 tax year, there’s a new income statement.

The IRS has introduced a new form called Form 1099-NEC. Whether you’re well versed in reporting your taxes or not, this may be confusing.

Typically, your self employment income is reported on box 7 of your 1099-MISC statement. For the 2020 tax year it is now reported on a 1099-NEC. The IRS has done this to separate filing deadlines.

Why would you receive Form 1099-NEC?

(more…)

Understanding Joe Biden’s Tax Plan

Posted by Manisha Hansraj on December 18, 2020
Last modified: December 18, 2020
joe biden's tax plan

Many Americans want to know how our future president’s tax plan will affect them.

Biden’s tax plan will affect wealthier Americans, corporations, and everyday individual taxpayers. He also plans on making significant tax revisions on Trump’s previous tax plan which took place in 2017.

Skip the tax jargon by taking a look at this quick breakdown.

Key Changes

Here are the major findings in Biden’s tax plan.

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How does the Coronavirus Stimulus Check Work? (FAQ’s)

Posted by Manisha Hansraj on April 7, 2020
Last modified: April 15, 2020
stimulus check

The IRS has approved an economic stimulus package due to the spread of the Coronavirus (COVID-19).

A $2 trillion economic plan was passed by the Senate to combat the affects of COVID-19 on Americans. This stimulus plan includes payments to individuals, the self-employed, unemployment coverage, and more.

Here are some common questions about the coronavirus stimulus checks.

Do I have to apply for the stimulus check?

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