KNOXVILLE, Tenn. (WATE) — Tax season officially begins in two weeks. A news release from the Internal Revenue Services says the delay will allow for additional programming and testing of IRS systems and help ensure timely refunds to taxpayers.
Monica Kinson, a local certified public accountant, predicts a busy season ahead for tax professionals given filing typically begins mid-January.
“We’re three weeks behind,” she said. She also fears many people may put off gathering important documents due to the delay. Above all, she fears some people may miss out on money, particularly those who don’t typically file. “I really feel that some people that don’t file usually are not going to be filing…and they can, perhaps, leave part of the stimulus payment on the table.”
If you did not receive one or either COVID-19 relief payments from the federal government, she explained, you have to file in order to receive the Recovery Rebate Credit.
“Perhaps retired people that received social security only, they’re not used to filing taxes because that was their only income and they were not required. But because of the stimulus payment, they may be filing a tax return for 2020,” Kinson added.
Due to tax reform in 2018, and the increase in the standard deduction, many taxpayers were no longer able to itemize charitable contributions. This year they’ll be able to recoup $300. Kinson said that can be added to the standard deduction, if you contributed to an eligible entity and have the appropriate documentation.
“I find, sometimes, people give to GoFundMe, but unfortunately those contributions are personal gifts that you give to a third party, but they’re not charitable contributions,” she said.
To qualify for a deduction, an entity must be registered and the transaction must be documented.
If you drew unemployment in 2020, you have to file a return. Kinson noted that is taxable income. How that will impact your refund or tax bill will largely depend on your withholding elections.
John Vandergriff, owner of Blue Ridge Wealth Planners, said you can still lower your taxable income for 2020 by contributing to an IRA or roth account while waiting to file.
“Most things that you do positioning wise, the opportunity ends at Dec. 31 of that year. But, as long as you haven’t filed your taxes yet, you can still make contributions to those retirement accounts,” he said.
The IRS anticipates most taxpayers will receive their refund within 21 days of electronically filing by direct deposit. They also encourage individuals and tax professionals to file electronically to avoid processing delays.