The Internal Revenue Service encourages taxpayers to take necessary actions to help file federal tax returns timely and accurately in 2021.
RECOVERY REBATE CREDIT/ECONOMIC IMPACT PAYMENT
Taxpayers who received an Economic Impact Payment, should keep Notice 1444, Your Economic Impact Payment, with your 2020 tax records. You may be eligible to claim the Recovery Rebate Credit on your tax year 2020 federal income tax return if:
You did not receive an Economic Impact Payment, or
Your Economic Impact Payment was less than $1,200 ($2,400 if married filing jointly for 2019 or 2018), plus $500 for each qualifying child they had in 2020.
If a taxpayer didn’t receive the full amount of the Economic Impact Payment for which they were eligible, you may be able to claim the Recovery Rebate Credit when you file in 2021.
INTEREST ON REFUNDS TAXABLE
Taxpayers who received a federal tax refund in 2020 may have been paid interest. Refund interest payments are taxable and must be reported on federal income tax returns.
CHARITABLE DEDUCTION CHANGES
New this year, taxpayers who don’t itemize deductions may take a charitable deduction of up to $300 for cash contributions made in 2020 to qualifying organizations.
Just like last year, refunds for tax returns claiming the Earned Income Tax Credit orAdditional Child Tax Credit, cannot be issued before mid-February. This applies to the entire refund, even the portion not associated with these credits.
(THI S INFORMATION WAS TAKEN FROM THE IRS.GOV WEBSITE)