Taxes are never as easy as we want them to be, and 2020 taxes will bring even greater challenges. Today our experts are sharing some tax tips we hope will simplify your filing! As always, we are also happy to take on the challenge for you; give us a call at 814-333-2488!
Tips for 2021 Taxes –
There’s a new $300.00 above-the-line charitable contribution deduction for folks who do not itemize deductions on Schedule A. The $300.00 is for whether you are single or a joint filer.
Retirement Plan Changes
The Cares Act allows 2020 distributions from IRAs and workplace retirement plans, such as 401Ks, if you are impacted by COVID-19, limited to $100,000 and not subject to a 10% penalty that you would normally run into. The amount can be contributed back to the retirement plan within three years and treated as a direct rollover. You can also choose to report it in income ratably over the next three years.
Child Tax Credits
The nonrefundable Child Tax Credit and Refundable Additional Child Tax Credit can provide significant tax savings to taxpayers with qualifying children or dependents. The amount you are eligible for depends largely on your gross income and tax rate.
Education Tax Credits
Popular education tax credits like the Lifetime Learning Credit and American Opportunity Tax Credit can help reduce the cost of higher education and may help increase your federal tax refund.
Earned Income Tax Credit
As far as federal income tax deductions go, the Earned Income Tax Credit (EITC) is one of the most advantageous, particularly for families in low-to-moderate income ranges. Depending on your income and number of children, the EITC may result in significant tax savings for your family when it is time to file.
Child and Dependent Care Tax Deduction
Daycare expenses can add up fast. But they can also translate into a huge tax saver at the end of the year, allowing you to take a sizable chunk out of your 2020 tax bill. With the Child and Dependent Care Credit, you can claim anywhere from 20% to 35% of up to $3,000 of childcare costs you paid for any child under 13. This includes care for any other qualifying dependent, incapacitated parent, or spouse you paid for so you could work or find work during the year.
Economic Impact Payments (Stimulus)
If you are eligible – and either didn’t receive Economic Impact Payments or if you think you qualify for more than you received – you will need to file a 2020 tax return and claim the Recovery Rebate Credit even if you otherwise are not required to file a tax
return. The best way to file a complete and accurate return is to file electronically. The tax software will ask you questions about your income, credits and deductions and will help you figure your Recovery Rebate Credit.
Why should I choose Meadville Tax Service to prepare my taxes?
Are you one of nearly half of all American taxpayers overpaying the IRS? Could you be repeating the same mistakes or overlooking deductions year after year? Meadville Tax Service’s tax professionals thoroughly examine each customer’s tax situation to get every deduction, credit, and tax advantage possible. We are here all year round and are your local go-to income tax preparation office.