Are you itching to get your tax return back? The IRS has been open for your tax filing since February 12, 2021, and you have until April 15 to submit it. With last year’s average return more than $2,500, this year may have a similar amount in store for you. To get your money as quickly as possible, e-file and select direct deposit. You should have your tax return back within 21 days, if there aren’t complications with your filing. Paper submissions will slow the process down significantly due to the pandemic, so keep that in mind if you decide to send a paper copy.
On the other hand, if you need more time to file, you can file for an extension. If the government grants the extension, you have through October 15 to submit your tax filing. Last year the due date was changed to July 15 due to pandemic complications, and it’s possible this could happen again, so keep an eye on the news for a potential extension. Keep in mind that if your filing is late, penalties apply.
General Tax Changes
While there are often many changes to our tax laws, what are some notable tax changes this year?
- The standard deduction is higher. For single filers, it went from $12,200 last year to $12,400 this year. For single filers 65 years old or older, it went from $13,085 to $14,050. For married joint filers, it went from $24,400 to $24,800. For head-of-household filers, it went up from $18,350 to $18,650, with an additional $1,650 after 65.
- Income tax brackets are a little wider. While income rates haven’t changed, tax brackets have been adjusted for inflation, making the tax brackets a little wider. For comparison, here are the last two years’ single and married filing jointly tables.
- Certain tax breaks are still applicable. The government extended or brought back several tax breaks that were due to expire or had already expired. These include mortgage insurance premium deductions, an exclusion for mortgage debt, and a credit for qualifying energy improvements.
- Residential energy credits are reduced. Credits for solar electric property, geothermal heat pumps, solar water heaters, small wind turbines, and fuel cell property went from 30% last tax year to 26% this year. While reduced, these incentives are still available for you to make your properties more energy efficient. Next tax year they’ll drop to 22%, and then they’ll end after December 31, 2021.
1040 Form Changes
If you’re a single filer, you may have noticed all the changes to the 1040 tax form in the last few years. Tax year 2018 saw a major overhaul of this particular form, which was aimed at simplifying the 1040 filing process. The overhaul eliminated the 1040-EZ and 1040-A and added several schedules. When this restructure didn’t simplify things, the IRS undid several changes in 2019. This year, tax year 2020, the IRS has changed a few more things.
So what are some changes? The schedules are down from six to three. Schedule 1 includes qualified business income deductions and capital gains or losses. It has itemized unemployment compensation and self-employment adjustments. Schedule 2 now includes some items that were previously included on schedule 4, such as self-employment and retirement plan taxes. Schedule 3 includes tax credits you can’t claim directly on the 1040 form and tax payments you’ve made, other than through withholdings on paychecks.
The form itself also has a few changes. Spouse and dependent information is now at the top of the first page. The IRS took some of the more used tax credits, such as the Earned Income Tax Credit and the American Opportunity Credit, off the schedules and put them directly on the second page of the form; you’ll find them on lines 27 through 30.
Taxes are constantly changing, but it’s worth staying on top of these changes for potential money savings. To get back the most money you can, be sure to keep all evidence of qualifying expenses. TenantCloud has a great system for tracking these types of expenses. Be sure to take advantage of these TenantCloud services this coming year, if you haven’t already.
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