As people and businesses start preparing their 2020 tax returns, there are a few changes to keep in mind.
Tax preparer Tonya Perkins of Tonya’s Tax Service in Caliente offers the following tips.
While tax returns may be prepared now through Feb. 11, the IRS will begin accepting and processing 2020 tax returns Feb. 12. The IRS anticipates a March 1 refund for many EITC (Earned Income Tax Credit) and ACTC (Additional Child Tax Credit) taxpayers if they e-file with direct deposit and there are no issues with their returns. The deadline for filing is April 15. Taxpayers may elect to use their 2019 earned income to determine the EITC if their 2019 earned income is more than their 2020 earned income. The maximum EITC is $6,660 for 2020.
Those who may be eligible for stimulus payments should carefully review guidelines for the Recovery Rebate Program online at IRS.gov. Most people received the economic impact payments automatically, and anyone who received the maximum payment does not need to include any information about their payments when they file. But those who didn’t receive a payment, or only received a partial payment may be eligible to claim these credits when they file their 2020 tax return. The stimulus payments in 2020 and 2021 are both considered on the 2020 tax return.
Economic impact payments are not taxable and do not reduce taxpayers’ refunds when they file in 2021.
Effective for 2020 is a deduction of up to $300 for qualified charitable contributions from adjusted gross income on Line 10b of Form 1040. This deduction requires the same documentation as on Schedule A, Itemized Deductions.