This time of year may be a little stressful, but a tax expert shared some tips and tricks to ease your mind. This tax season may also look a little different, and you’ll need to be aware of some key changes.
First, experts say there are differences in how unemployment benefits are treated.
"For 2020, unemployment was not taxable up to $10,200 for federal purposes and that’s not true in 2021. So if you didn’t have withholding taken out on your unemployment you may very well have a tax liability, and you may have to pay money in," explained Tom Wheelwright, CEO of WealthAbility.
You’ll also need to account for advance child tax credit payments.
"I think the most errors are going to occur with the child tax credit. Remember, there are a lot of people that receive that advanced payment, $300 a month," Wheelwright cautioned.
Now that sports betting is legal in Arizona, take a double look at the gambling questions on your tax return, too. "If you won or lost that had an impact as well," he said.
Experts also say it’s best to get returns done early and not wait until the last minute. If you do, file an extension, so it doesn’t get lost.
This year's deadline for filing taxes will be April 18, rather than the usual April 15. But extensions can be requested online by filling out Form 4868. By pushing back the filing date, you can also avoid a failure-to-file penalty, which is an extra 5% per month on the unpaid amount. That can add up to 25% of the tax due.
"There’s 11 million tax returns from last year that haven't been processed yet. So what that means is particularly, if you are doing refunds, the way to get a refund is to make sure that you give the IRS your tax return … First of all, you have to e-file your tax return and second of all, you have to let them have your bank account number, so they can do a direct deposit," Wheelwright said.
Experts say if you have anything tricky outside your W-2, home mortgage, and if you run a business, it’s always a good idea to get a tax preparer to make sure things go smoothly, and they may even help you get more money back in your tax returns.
- IRS: Tax-filing season begins on Monday
- IRS to start requiring facial recognition scans to access tax returns
- Unemployment claims climb to 286,000, the most since October
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