The 2021 Tax Season

It seems that the 2020 tax season was not that long ago. Individual taxpayers received extensions to July 15, 2020 and many more extended filings until October 15, 2020. To the surprise of many the 2021 tax season is right around the corner.

Changes that individual taxpayers should be aware of:

  • If you qualified for a stimulus check during the first round of payments and did not receive a check from the IRS do not worry. Individual taxpayers that qualified for stimulus payments and did not receive a payment in 2020 and did not elect the tax credit of up to $1,200 when filing their 2019 tax return, can still elect to receive the credit on their 2020 tax return. It is important to remember that tax credits are different from deductions. Tax credits are a dollar-for-dollar deduction from taxes that you owe. To better illustrate this, for instance if you owe the IRS $5,000 on your tax return and should have received the full stimulus check of $1,200 and did not. You can apply the credit towards the taxes that you owe and lower your tax bill by $1,200 dollars. Tax deductions such as State and Local Taxes “SALT” or home mortgage interest expense deductions lower your taxable income not the amount of taxes you may owe.
  • The same goes for the second round of stimulus payments that were issued by the IRS during the last week of December in 2020 by check, debit card, and direct deposit. If you did not receive one by the self-imposed deadline by the IRS which is January 15, 2021. You should inform your tax preparer to elect to receive the credit on your 2020 tax return.
  • Cash contribution limits without itemizing your deductions have increased for charitable contributions in 2020. You can now deduct up to $300 “above-the-line.” This means that you do not need to itemize your deductions which most individuals that do not own homes usually do not meet the higher deduction thresholds.

Contact K & S Law Group (800) 982-3880 if you  are looking for assistance in filing your business or personal tax return, tax consultation or advice, audit defense representation for the IRS and FTB. K & S Law Group tax attorney’s have been serving clients in Orange County  and throughout the state of California.

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