After the holidays and the end of 2020 comes one of the best times of the year: tax season 2021! It's time to start your tax preparation now if you want to get ahead of tax season 2021. It's bound to look a lot different from what most people are used to and tax planning strategies may change due to the COVID-19 pandemic.
Due to the COVID-19 pandemic, there are new credits and deductibles available for people across the United States! That means some people can expect a bigger return this year. It also means that some people may need to pay more in taxes, since they may have started having some of the best ideas to make money during hard times.
To learn how to get started on your taxes for 2021, keep reading below.
Start Your Tax Preparation With A Tax Return Estimator
The best way to prepare for tax season 2021 is to pull up a tax return estimator. By estimating your tax return ahead of time, you may find the motivation to get your taxes in as quickly as possible. It's crucial to file your taxes as quickly as possible this year since so much has changed compared to previous filing years.
Many people can expect thousands of dollars in their tax returns this year, and there is no better motivator than money! An estimator will ask you basic questions about your tax situation to give you a glimpse of what to expect from this year's taxes. You will need basic information like your wages, dependents, and age to use an estimator.
Budget Ahead Of Time If You May Owe Money
The best part about using a tax return estimator is that it will notify you if you owe money this year. It helps you get started on your tax preparation! That way, you will be able to budget for your tax payment ahead of time and it may not come as much of a surprise. Many people can also expect to have to pay the government this year.
The COVID-19 pandemic has caused many people to start working from home, on their own terms. It's changed their tax planning routines. That means that their income may not have been reported to the government, so no income tax may have been taken out. The IRS will want that money come tax time so you need to be well prepared.
Expect Changes Due To the COVID-19 Pandemic
There may be new deductions and credits due to the COVID-19 pandemic this year. Since most people started taking steps towards proving income as a contractor this year, they may find new deductions available for them. Some people should start their tax planning by researching which of these they're eligible for.
Many of the expenses they may be able to written off include the purchases made for work, especially if they have their own business. People who did not get a COVID-19 stimulus check may also be eligible for a new tax credit. The IRS is working to make sure that the stimulus gets to as many Americans as possible.
So if they did not get it the first time, they will have another chance during tax season 2021. The standard deduction has also increased by $300 for married couples and $150 for single filers. The tax brackets also changed, but there are still only seven of them. The first tax bracket ends at $40,525 worth of income for the year.
Tax Planning Is Also About Being Charitable
To maximize your deductibles, you can report any charitable donations you may have made this year. Since many nonprofit organizations were low on funds this year due to increased demand, they organized several new fundraisers. Like many others, you might've participated in them.
Those people will be able to write off their charitable donations this year and will enjoy a bigger tax return. They will also have the knowledge that they helped people get through one of the toughest tragedies in recent history.
Gather Documentation For Deductibles
The best tax planning strategy this year is to gather documents about your deductibles. Many people simply choose the standard deduction when filing their taxes since it makes the process simpler. However, they are missing out on tons of savings when they don't itemize their deductions.
Start gathering receipts and emails to support anything you may claim on your taxes. It's best to create a "Taxes 2021" folder on your desktop where you store all of your documents. That way, you can stay on top of all the documents you need to correctly file your taxes. This will simplify things for you.
Contact Employers About W-2s And Other Documents
The most important form for most tax filers is the form W-2. This document is a simple table that lists your wages associated with a specific employer, as well as income taxes and other financial information. With a W-2, all you need to do is fill in the box on tax filing software to finish your taxes.
Reach out to your employer to learn when they plan on releasing W-2s for employees. If they give you a firm date for when you can expect your W-2, then you can start creating a timeline for filing your taxes. Just make sure to get them done before April 15 though as that is the due date you do not want to miss.
Submitting 2021 Taxes Should Stay The Same
Phew! Some good news this year is that people will still be able to file their taxes just like they've done before. There are tons of online options people can use to file their taxes from home, as long as they put in the work to collect documents beforehand. However, there will also be options to file with tax experts.
Many tax filing offices will likely have new restrictions in place to keep employees and customers safe. They may require people to wear masks or practice social distancing while in the office. However, they will still be there to help people who want to maximize savings on their taxes! The best way to file your taxes for 2021 is to simply go to the experts.
Contact An Expert To Maximize Your Savings
The best way to prepare for tax season 2021 is to simply talk to an expert. They are there to make sure your tax preparation goes smoothly and that you get the biggest return you can possibly get! Best of all, you can contact most experts without even leaving your home. To learn more about W-2s and how they're prepared, just use the W2 generator tool to generate W2 form online.
By preparing a W-2, you'll learn more about how taxes are handled and be better prepared for tax season. If you face any difficulties preparing your documents, just contact us and one of our representatives would be happy to assist you!