Before you file your taxes in 2021…
The IRS has made several changes to laws that will affect your tax return this year.
Here are 5 things you need about your 2021 tax return.
1. If You Didn’t Get A Stimulus Check, You Can Claim It As A Tax Credit.
If you never received a stimulus check (the IRS calls it the “Economic Impact Payment”), you’re not alone. An estimated 12 million taxpayers either didn’t receive a check or didn’t get the right amount.
So if that’s you, here’s what you need to know.
When you file your taxes, you can claim the “Recovery Rebate Credit” if you didn’t receive the first stimulus check.
This credit will essentially recover the full amount of the Economic Impact Payment, or a partial amount if you received some but not all of it.
2. You Might Have Received An Interest Payment With Your 2020 Tax Refund. And If You Did, You Owe Taxes On It.
In addition to their 2020 tax refund, 13.9 million taxpayers received an interest payment too.
Interest payments are a separate payment from your tax refund, meaning it would have appeared in your bank account separately from your refund.
The average interest payment was about $18. And if you received a refund interest payment like this, you will owe taxes on it.
The IRS will send Form 1099-INT to all interest payment recipients who received at least $10.
3. You Qualify For Tax Deductions On Charitable Giving In 2021, Even If You Don’t Itemize
Typically, charitable giving is only tax deductible if you file your tax return using the itemized deduction instead of the standard deduction.
Since 90% of taxpayers use the standard deduction, charitable contributions provide no tax benefit to most of us.
But this year is different.
To help keep non-profit organizations afloat during the pandemic, the IRS has incentivized charitable giving. Taxpayers who do not itemize their deductions in 2021 can still deduct charitable contributions up to $300.
So if you donated to any qualifying nonprofit organization in 2020, you can deduct up to $300 from your taxable income.
4. The Standard Mileage Rate Has Dropped
Now for some bad news (it is the IRS, after all — it can’t all be good news).
If you use your personal vehicle for business usage, the standard mileage rate will be $0.56 per mile in 2021. In 2019, this amount was $0.58.
A $0.02 decrease may not sound like much, but it can add up quickly for people who use their vehicle for work, such as Uber and Waitr drivers.
5. Refunds May Take Longer To Receive
While tax refunds are typically issued less than 21 days after they are filed, this is not a guarantee, especially following the 2020 pandemic.
This is technically not new information, but it bears repeating and emphasizing. Your tax return could take some time to process.
Don’t want to wait that long? Midwest Finance can issue your tax refund within 24 hours.
When you file your tax return at Midwest Finance, you can access and start spending your refund within 24 hours. We offer a same-day refund advance, which gives you an early refund via check or the Faster Money Card debit card.
Need help filing your taxes in Texas or New Mexico?
Find a Midwest location near you and schedule an appointment with one of our tax specialists. We also accept walk-ins all day, every day.
