The Internal Revenue Service encourages taxpayers to take all needed steps to file the federal tax returns accurately and within the deadline of January 31, for the year 2021. To make sure that the taxpayers do not make any mistakes in the process and do not miss out on the tax benefits, it is important to do some groundwork and research. Here are a few simple and efficient tips to get ready for tax filing and to make the process completely easy for the year 2021.
Steps to getting Tax Filing Easier for the Year 2021
The most important step to get ready for the taxes is to gather all pertinent information and organize the tax records. This will not only make the process simple but also helps to avoid any errors in the process.
- Disclosing all relevant information:
Gathering and organizing all relevant information will help in discovering overlooked credits and deductions as well. Make sure to collect,
- W-2 Forms from employers
- Form 1099 from other payers
- Collect records about virtual currency transactions.
- Collect Notice 1444 if you have received an Economic Impact Payment
Do not forget to include information about unemployment income, refund interest, virtual currencies, and income from the gig economy as more income is taxable.
- Check the TIN Number for Validity:
Tax Payers should make sure that their Tax Identification Number or TIN is valid and has not expired by the year 2021. Individuals can also submit Form W-7 as an application for the IRS to get an individual TIN. If you fail to renew the TIN before filing the tax returns, then you could become ineligible for some tax credits and also face a delayed refund.
- Calculate the Tax Withheld in Advance:
Taxpayers can make use of online tools to determine the right type of tax that has been withheld from the paycheck. The Tax Withholding Estimator tool available at IRS.gov will help to calculate the tax withholding and submit a new W-4 form to the employer.
- Economic Impact Payment:
Taxpayers can claim recovery rebate credit or economic impact payment on the IT returns of the year 2020 if they meet certain eligibility criteria such as,
- The taxpayer didn’t receive Economic Impact Payment
- The Economic Impact Payment was less than $1200 along with $500 for each qualifying child born in the year 2020.
- Report Interest Payments:
Interest payments are taxable and should be reported on the federal IT returns. If you have received a tax refund and you have paid interest, then you should file Form 1099- INT if you have paid interests totaling $10.
Due Date for Filing the Tax Returns
It is important to file taxes before January 31st to avoid penalties and it can be filed in the following ways.
- By using the IRS Free File Program available through the website IRS.gov.
- File through an Interactive Tax Assistant
- Choose a tax professional and prepare a credible returns form
- Use the VITA locator tool for free basic tax return preparation.
The Internal Revenue Service encourages taxpayers to take all necessary steps to file the returns accurately and in a time for the year 2021. Collect and organize all relevant information and discover overlooked credits and deductions to fill the form authentically.