With so many things going virtual this year, your taxes should be no exception.

What credits should you be claiming and what deductions should you take?

In the era of COVID-19, tax preparation should be the last thing on your mind. But, with so many credits, deductions, and benefits it can be difficult to keep track.

That’s why we’re here to help. A.P Tax and Accounting have gathered some special COVID-19 tax preparation tips to consider for the upcoming year.

The Recovery Rebate Credit

The first credit you should consider adding to your return is the Recovery Rebate Credit (only if you were eligible). For those of you who were, you should have already received the full amount in two rounds of payments (known as the Economic Impact Payments).

For this credit, you will need to know the amount of the payments issued because your return will be reduced by them.

Regardless, have a look at your baking statements and speak with a professional to verify what (and how much) you should claim.

Interest Payments

You should also be on the look-out for any interest payments you received. People who received a federal tax refund in 2020 may have been paid interest. This likely has gone to those of you who filed on time in 2019.

These payments would have been issued separately from your return and must be reported on 2020 federal income tax returns. Another helpful tip is that anyone who did receive interest of at least 10$ or more will have received a Form 1099-INT in January 2021 from the IRS.

Additional Deductions

Any charitable donations should also be noted on your return. This year, taxpayers who don’t itemize deductions can take a charitable deduction of up to $300 for cash contributions made in 2020. But, there is a slight catch. It needs to have been made to one of the ‘qualifying organizations’ as outlined by the IRS.

Additionally, if you attended any schooling or training during the year, you might be eligible for an education credit. If you don’t owe any taxes, there are two potential education credits you may qualify for: The American Opportunity Tax Credit (AOTC) or the Lifetime Learning Credit (LLC).

Though similar, there are differences to determine which one would fit your situation. Be sure to read through the requirements and speak with a professional if you are confused.

Complete E-Filing

E-filing is the fastest and easiest way to document, organize, and file your tax returns. Whether it’s with the IRS’s Free File Program, a downloadable software, or a trusted financial professional; electronic filing is the way to go.

But, before spending money on software, anyone with an income of $72,000 or less can file their federal tax return electronically for free using the Free File Program. This program is seamless and does all the tricky math for you. Plus, it helps ensure you get your return (via direct deposit) as quickly as possible using either a bank account, prepaid debit card, or mobile app.

Mark the Important Dates

There are a few important dates you will want to keep in mind when dealing with your taxes. For the upcoming year February 12, 2021, is when the IRS officially begins their 2021 tax season. This means that individual tax returns will start being accepted and processed.

April 12th is another important date to mark in your calendar because it’s the due date for filing 2021 tax returns (or requesting an extension). This is also the due date for paying any 2020 taxes owed. And, if missed, you can expect interest and penalties.

Speak with a Professional

Even in the best of times, taxes can be tricky. And that’s exactly why we’re here to help. With all the new deductions, changes, and stress that this year brought filing your return should not be hard.

That’s why we recommend speaking with a professional. A professional will be able to review your current situation, your accounts, and previous years’ filings to get the most out of your return.

If you’d be interested in learning more, or knowing what services would benefit you, give us a call at 407-328-5001.

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