New tax year, new deductions

Stretching Your Dollar

INDIANAPOLIS – Tax season is right around the corner and there are important changes to keep in mind.  At the same time, there are also scammers out there trying to get your information and money. 

We spoke to a financial professional who is sharing what you need to know before you file this year.

The past year is one many would like to forget, however, there are certain events that happened in 2020 that impact our money in 2021. From taxes and unemployment benefits to required withdrawals from certain retirement accounts, being aware of the changes can help save you time and money.

Let’s start with the most basic deduction, which has changed.

“The standard deduction has gone up to $12,400 for individuals and $24,800 for married couples filing jointly, so that can help a lot of people to save some money,” said Casey Marx, the CEO of Crown Haven Wealth Advisers.

Marx says the IRS is also boosting what’s known as the Savers Credit.  It’s available for single filers making up to $32,500 or married couples making $65,000.  That can definitely affect your taxes. 

The IRS will begin processing tax refunds on February 12, and there are some important changes to know before you file to get the biggest refund. Many of the modifications stem from the CARES Act, the first COVID-19 relief bill passed last March. 

“The Cares Act allowed donors to get a federal income tax deduction for cash donations up to 100% of their adjusted gross income.  Normally the limit is 60% so that’s a big change,” said Marx.

A lot of people had to work from home because of COVID.  And it can help you with your taxes because there is a tax deduction for at-home workers.  But it only applies to self employed workers who use their office space exclusively for business purposes, not personal ones.  

On the heels of the extended tax filing deadline in 2020, it may feel like you just filed your taxes. But it’s that time of year, and scammers are out in full force looking to steal your information and your refund. 

One of the simplest ways to spot a scam is by the method scammers use to contact you. When doing your taxes, or preparing for them, watch out for COVID criminals.  They will try to get your social security number, bank information, and personal information.  Simply put, if you didn’t get a request in the mail, it’s NOT real.

“The IRS will initially contact you by sending a letter in the mail. The IRS will never email you, send a text or contact you on social media,” said Marx.

One way to prevent your information being swiped or your identity getting stolen is to never file with public WiFi and have a strong password. 

If you think you’ve been the victim of identity theft, file a police report with your local police and contact the IRS.  You should also contact the fraud department of the 3 major credit bureaus.  Those resources are also listed on Crown Haven’s website.   

Finally, what if you are still expecting that $600 stimulus check and haven’t gotten it?  How will that affect your taxes, because you never got it in 2020? 

If you are due a stimulus check but haven’t received the money by the time you file, claim it on your return to prevent having to amend your tax return later.

Line 30 on the 1040 tax form allows you to let the IRS know that you didn’t receive your funds. If you’re owed a refund on 2020 taxes, the IRS will add the stimulus money to the amount you’re due to receive.

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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