When people get ready to file their federal tax return there are new
things to consider when it comes to which credits to claim and what deductions
to take. These things can affect the size of any refund the taxpayer may
receive.
Here are some new key things people should consider when filing their 2020 tax
return.
Recovery rebate credit
Taxpayers may be able to claim the recovery rebate credit if they met the eligibility requirements in 2020 and one of the following
applies to them:
• They didn’t receive an Economic Impact Payment in 2020.
• They are single and their payment was less than $1,200.
• They are married, filed jointly for 2018 or 2019 and their
payment was less than $2,400.
• They didn’t receive $500 for each qualifying child.
Refund interest payment
People who received a federal tax refund in 2020 may have been paid interest.
The IRS sent interest payments to individual taxpayers who timely filed their
2019 federal income tax returns and received refunds. Most interest payments
were received separately from tax refunds. Interest payments are taxable and
must be reported on 2020 federal income tax returns. In January 2021, the IRS
will send a Form 1099-INT, Interest Income, to anyone who received
interest of at least $10.
New charitable deduction
allowance
New this year, taxpayers who don’t itemize deductions can take a charitable deduction of up to $300 for cash contributions
made in 2020 to qualifying organizations. For more information, people
should review Publication 526, Charitable Contributions.
Other refund-related
reminders • Taxpayers shouldn’t rely on receiving a refund by a
certain date, especially when making major purchases or paying bills. Some tax
returns may require additional review and processing may take longer.
• Refunds for taxpayers claiming the earned income tax credit or additional child tax credit
can’t be issued before mid-February. This applies to the entire refund, not
just the portion associated with this credit.
• The fastest and most secure way to receive a refund is to
combine direct deposit with electronic filing, including the IRS Free File program. Taxpayers can track the status of their
refund using the Where’s My Refund? tool.
As always, contact you Crosslin tax team members with any questions you may have. We are looking forward to continuing to serve you in 2021!
