COVID-19 tax relief, stimulus payments, changes to common IRS forms, and unemployment are expected to impact filers this year.
With the 2021 tax season officially starting, TaxSlayer, a leading professional and DIY tax preparation software development company, is committed to helping America’s taxpayers anticipate the impact of this year’s tax law changes and prepare to file for unique circumstances such as unemployment and working from home in the wake of the COVID-19 pandemic.
As social distancing continues into tax season, TaxSlayer expects that many taxpayers will be filing returns themselves at home. “Our mission is to make tax filing easy for everyone, no matter their situation,” says Director of Consumer Products, Seth Babb. “In these uncertain times, that means giving people access to even more resources and support, so they can navigate these changes and still file with confidence.”
The IRS will begin processing 2020 tax year returns on February 12, 2021. Head to TaxSlayer.com to start for free today.
New and Noteworthy Tax Laws for the 2021 Tax Season
Charitable contributions – Charitable cash contributions up to $300 will be treated as above-the-line deductions, meaning taxpayers can write off up to $300 in cash donations, even if they take the standard deduction.
The Recovery Rebate Credit – People who were eligible for an Economic Impact Payment (EIP) but did not receive one or both payments, or their payment was not correct, may be able to claim a refundable tax credit for the amount they were due. The IRS is encouraging filers to understand the eligibility requirements, as many people, including recent college graduates, may be able to claim the credit.
Tax relief for self-employed filers – Self-employed individuals and business owners who had to take sick leave from their job for their own health or to care for a family member could receive a refundable tax credit to help make up for the resulting loss in income.
Changes to Form 1099-MISC – Beginning with tax year 2020, the IRS is reinstating the use of Form 1099-NEC to report any compensation paid to non-employees by a company. Gig workers, contractors, and other non-employees will no longer use Form 1099-MISC to report income from self-employment.
Read More: Hacking Insurance to be 10x Faster
Unemployment income – With a record number of individuals receiving unemployment compensation due to COVID-19, it’s important that taxpayers understand the tax implications of those benefits. Unemployment income is taxable and is reported on Form 1099-G.
Unreimbursed employee expenses – Due to the pandemic, many offices and businesses closed doors and employees continued their work from home. It’s important to note that for W-2 employees, the costs of setting up a home office are most likely not tax deductible, because the Tax Cuts and Jobs Act eliminated the unreimbursed employee expenses deduction in 2018.
New Form W-4, Employee’s Withholding Certificate – The IRS completely redesigned Form W-4 in 2020 to be more aligned with the Tax Cuts and Jobs Act. The primary goal of the redesign was to prevent people from under-reporting their allowances, which would cause them to owe more taxes on their tax return.
EITC “lookback” provision – Tax filers who are eligible for the Earned Income Tax Credit and who experienced a loss of income in 2020 can use their 2019 earned income to calculate their credit amount when they file this year.
The IRS will begin processing 2020 tax year returns on February 12, 2021. To speed refund delivery, they are urging taxpayers to file electronically with direct deposit as soon as they have the information they need. To help filers get a head start, TaxSlayer created a Tax Prep Checklist outlining the documents people may need to have on hand when they sit down to file. TaxSlayer’s 2021 Refund Schedule provides a look at estimated delivery dates based on when a filer submits their return to the IRS.
As always, TaxSlayer is committed to providing low-cost tax filing and keeping more money in the pockets of hard-working American taxpayers. Anyone, no matter their situation, can file a federal return with TaxSlayer Classic for just $17, while tax filers with a qualifying tax return can file federal and state for free. TaxSlayer is now open and accepting returns. Head to TaxSlayer.com to get started filing today.
Read More: XP Inc. Acquires Riza M&A