Tag: taxfavors

What Is Really The Tax Filing Season

The 2020 tax filing season is delayed until February 12, so the Internal Revenue Service can do additional programming and testing following the December tax law changes.

“If filing season were opened without the correct programming in place, then there could be a delay in issuing refunds to taxpayers,” the Internal Revenue Service said in a press release. “These changes ensure that eligible people will receive any remaining stimulus money as a Recovery Rebate Credit when they file their 2020 tax return.”

The filing season usually opens in late January when the IRS begins accepting and processing returns. Last year, the season started on January 27.“While I am disappointed that this year’s filing season will begin later than usual, I recognize that the IRS has faced extraordinary challenges throughout the COVID crisis,” Ways and Means Committee Chairman Richard E. Neal (D-MA) said in a statement on Friday.

The $900 billion stimulus deal and government-funding bill that passed together at the end of December included some key tax changes for the 2020 tax year.

Eligible taxpayers who didn’t receive the second round of stimulus payments included in the latest stimulus bill or didn’t receive the full amount they were entitled to can claim them on their 2020 tax returns. They can also claim the first round of payments. How the Child Tax Credit and the Earned Income Tax Credit are calculated for the 2020 tax year also changed under the stimulus deal.

Under the government-funding bill, medical expenses now must exceed only 7.5% of adjusted gross income to be taken as an itemized deduction. Before, that threshold was 10%.

Read more: Here’s what to do if you haven’t gotten your stimulus check

The IRS urges taxpayers to file electronically and use direct deposit as a payment method as soon as possible. The agency anticipates 9 out of 10 taxpayers will. receive their refund within 21 days if they file their returns electronically, used direct deposit, and no issues popped up with their return.

People eligible for free tax filing can begin their taxes now and the returns will be transmitted to the IRS on February 12. These are providers participating in the IRS Free File for 2021:

  • 1040Now
  • ezTaxReturn.com
  • FreeTaxReturn.com
  • FileYourTaxes.com
  • Intuit (TurboTax)
  • On-Line Taxes (OLT.com)
  • TaxAct
  • TaxHawk (FreeTaxUSA)
  • TaxSlayer

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By: Denitsa Tsekova

More From Yahoo Money:

Furlough vs. Layoff: What’s the Difference for Your Taxes?When a company chooses to reduce its workforce, it may approach that reduction in a few different ways. How a company makes these staffing changes could result in different implications for you and your taxes. Here’s what you should know about the differences between a furlough and a layoff.

Read MoreBrought to you byTurboTax.comCapital Gains and LossesWhat is a capital asset, and how much tax do you have to pay when you sell one at a profit? Find out how to report your capital gains and losses on your tax return with these tips from TurboTax.

Read MoreBrought to you byTurboTax.comStimulus 2020: Unemployment Insurance for Self-Employed IndividualsDue to the recent coronavirus pandemic, many businesses and individuals are facing challenging times — including those that are self-employed. The government has issued unemployment insurance for self-employed individuals to help them manage their finances.

Read MoreBrought to you byTurboTax.comGreat Ways to Get Charitable Tax DeductionsGenerally, when you give money to a charity, you can use the amount of that donation as an itemized deduction on your tax return. However, not all charities qualify as tax-deductible organizations. While there are many types of charities, they must all meet certain criteria to be classified by the IRS as tax-deductible organizations. There are legitimate tax-deductible organizations in many popular categories, such as those listed below.

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What You Can Do Right Now to Make 2021 Your Best Tax Year Ever

Traditional tax planning is transactional and, honestly, not nearly as beneficial as one might think. You ask your taxes preparer questions and figure out what to do in the spur of the moment. Creating a long-term plan of action for your taxes is how to create real savings, but it takes months to create an effective plan. Now is the time for business owners and investors to be planning to reap the rewards for the rest of 2020 and into 2021.

Analyze income

Many accountants suggest pushing income to a later year. There are a few different factors to consider when deciding whether to do this. First, is your income so low you lose deductions? Many personal deductions don’t carry over to the next year. Rather than taking deductions now, you may want to accelerate your income to make use of all your deductions. Another factor to consider is the next year’s tax rates. There’s a real chance that income tax rates could increase in 2021, so the best plan would be to accelerate your income into 2020 to avoid paying at a higher rate.

Related: 5 Tax Strategies to Help Your Business Survive the Coronavirus Slump

Identify opportunities

With both economic and political uncertainty, it’s likely that we’ll see another economic downturn in 2021. During those times there are always opportunities to succeed, but if you don’t plan for them, you’ll be left with remnants. Now that you have an income tax plan in place to reduce your taxes, you can plan to use those savings to invest when the market goes down and investments are cheaper. We all saw the winners and losers following The Great Recession, so make sure you’re prepared to take advantage of opportunities that increase your wealth.

Become someone tax law favors

While preparing to make investments, consider if they’re the ones the government wants you to make. Tax laws are a series of incentives for business owners and investors and it’s easy to take advantage of the opportunities when you understand how the laws can work in your favor.

The government favors producers like business owners, real estate investors and commodity providers and has created huge tax incentives for these activities because they spur economic growth. While consumers typically owe 40% in taxes, producers can easily pay less than 20% in taxes based on the level of their activity. This reduction in taxes allows you to continue to reinvest and grow your wealth.

Related: Analyzing Joe Biden’s Tax Plan

As you can see, reducing your taxes is a valuable and time-consuming process. While 2020 was a difficult year for many, 2021 holds opportunities for those who plan appropriately. Don’t allow yourself to be stuck in a tax rut doing the same things you’ve always done. It’s time to reevaluate your plan and set yourself up for your best tax year yet.

By: Tom Wheelwright / Entrepreneur Leadership Network Contributor

In this 7-minute video clip recorded this morning – 24th August 2020 – Paul takes a brief look at the minimal tax changes in this years’ CF, ER and CeMAP syllabus. Paul’s at https://www.archertraining.co.uk/

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