In a normal year, Americans would already be worrying about tax season. However, due to the political climate as well as the COVID-19 pandemic, 2021 is already proving to be anything but a normal year. Therefore, tax season may experience some changes as well. But regardless of those changes, the more prepared people are for tax season, the sooner they can get past the least pleasant parts of the process and receive their tax benefits. The IRS recently announced that it will begin receiving and processing 2020 income tax returns on February 12. This is actually two weeks later than tax season began last year, likely in part due to the fact that 2020’s income tax return deadline was greatly extended. Additionally, at this point, Washington has put forth multiple COVID relief packages, including the stimulus checks that were put forth to help Americans through the pandemic. With those packages come new laws, which the IRS has to contend with and adjust to. Therefore, the adjusted tax season schedule is as much for the benefit of the IRS as it is for individual Americans.
But that doesn’t mean that taxpayers can’t take advantage of these changes. They should not only take this time but to boost their overall income while waiting. Fortunately, there are several methods through which individuals can ensure that they get the most possible benefits out of their tax returns.
This Season Is Incredibly Important
Some have referred to the 2021 tax season as the most important tax season, with good reason. The IRS is already so burdened that if they began accepting income tax returns in January as they normally do, they would be overloaded and would be forced to issue tax refunds later than usual. It’s incredibly important that Americans under severe financial stress receive their income tax refunds on time, which is why the IRS has chosen to take the time to prepare more efficiently.
Another reason why the IRS has been overburdened is that it has been responsible for ensuring that stimulus checks are issued in a timely manner. At this time, the second round of stimulus checks is currently being delivered still; and the Biden administration has voiced plans to issue a third round of stimulus checks. This means that the IRS has to balance issuing these checks and processing income tax returns.
Technically, however, individuals can begin working on their taxes right now. They do not need to wait until February 12 to begin tackling them. Firstly, they should begin collecting their W-2s as well as other types of paperwork. They can start using simple software, or for that matter working with a tax professional. By taking their taxes seriously from the beginning, they will start completing their tax returns early and therefore have them ready to file on February 12. People who submit their taxes right on this date will be able to receive their income tax returns more quickly.
After utilizing tax preparation software or the help of a tax professional, individuals should move on to make sure that they have their direct deposits set up. Not only will this make it easier for them to receive their tax refunds; it will also ensure that if there are future stimulus checks, they will receive them via direct deposit, and therefore more quickly than they would otherwise. Usually, individuals that file their taxes correctly will be able to receive their tax refunds within 21 days of their initial filings.
Of course, individuals with larger estates may experience greater complications and may be less likely to gain significant tax refunds. They may also be subject to additional taxes that people with smaller incomes or estates are not. If an estate is over $10,860,000 for married couples and $5,340,000 for single people, any amount in excess will be subject to estate taxes.
What To Do If You Need Respite Before Your Refund Arrives
Many Americans rely upon their tax returns in order to give them some financial relief. They will be more reliant upon them now than ever before due to the COVID-19 pandemic. If they’re forced to wait longer for their tax returns, they may make decisions that are not always wise; for example, one out of every three people attend work when sick, and many of them do so because they need to fill a financial gap when waiting for their tax refunds. That’s not an option for many Americans now that COVID-19 is a reality in their lives. But there are still ways in which they can accrue funds in order to assuage financial deficiencies until tax refunds are issued.
Firstly, it’s important that people take the time to reassess their insurance payments. While the window to change one’s health insurance plan easily has closed, car insurance policies can be more easily changed, as can homeowner’s insurance and renter’s insurance plans. Individuals should feel able to call their insurance providers and ask for their rates to be cut. Additionally, they should consider looking for rates from other companies. This could further motivate their current providers to provide better plans.
Refinancing a mortgage is also an option. Right now, mortgage rates are dropping to record lows. Refinancing home loans can offer big savings. Hundreds of dollars can be saved each month through refinancing a mortgage, and though it’s not always ideal, it should be considered.
People that have potentially lucrative hobbies should also consider ways to turn them into cash. This is more accessible than ever right now, thanks to websites like Etsy and the growing gig economy. People should provide their products and services for cash if they can, as this will allow them to do what they want while at the same time making important money.
There are so many issues to consider as tax season starts. It’s important for people to prepare so that they are not only ready to submit their income tax returns, but able to wait for their tax refunds.
