Top 8 things-to-do now to make tax filing easier in 2021.
The IRS has been encouraging taxpayers lately to file their tax returns for 2021 in a very easier and convenient manner without any errors. The IRS has given a large series of reminders to the taxpayers about the upcoming tax filing and the steps which must be taken for filing tax returns in an error-free manner.
The IRS has made a special page available on the IRS.gov website which gives taxpayers the easy steps for making federal tax filing much easier for the year 2021.
Let us check out the important 8 things to do now for making federal tax return filing much easier for the taxpayers in 2021.
- Usually, most of the income is taxable and so it is necessary for the taxpayers to collect their income documents properly. These income documents can be the Form W-2 obtained from their employers, Form 1099 obtained from banks, and the records of virtual currencies. These incomes can also include unemployment income, refund interest, and any other income which has been obtained from the gig economy.
- During the beginning period of 2020, the taxpayers might receive the Form 1099-NEC, Nonemployee Compensation other than the Form 1099-MISC if they have offered any kind of services and have received the payment for that.
- The taxpayers must also need Notice 1444, Economic Impact Payment which would depict the amount of payment they have received during the year 2020. This amount depicting the Economic Impact Payment would be helpful in the calculation of the Recovery Rebate Credit for which they might be eligible while filing the Federal tax return in 2021. Some of the taxpayers who do not qualify for receiving the Economic Impact Payment in the year 2020 might be qualifying for obtaining the Recovery Rebate Credit while filing their taxes for the year 2020 in the tax year 2021.
- Taxpayers must ensure that any address changes must be updated with the IRS. Also, any legal name change should be notified to the Social Security Administration for avoiding any kind of delay in the federal tax processing process.
- Those taxpayers who have their Individual Tax Identification Number (ITIN) must ensure that the ITIN has not expired yet. If the ITIN of a taxpayer has not been used on a federal tax return for at least once in the last three years then it would expire by 31st December 2020.
- If the ITIN of a taxpayer has expired, then the IRS suggests the taxpayer’s submission of Form W-7. The application for IRS Individual Taxpayer Identification Number can be used for the renewal of the ITIN. If taxpayers have not renewed their ITIN before filing their tax returns might have to face the consequences of delayed tax refunds and can also result in ineligibility for availing some types of tax credit.
- The Tax Withholding Estimator is a tool that has been designed by the IRS that would help in the determination of the correct tax amount which can be deductible from the paychecks of the taxpayers. The Tax Withholding Estimator can also help in the determination of whether any adjustments into withholding is necessary or not. If any changes into the Withholding are necessary then it can be done by submission of a new Form W-4 to the employer.
- If a taxpayer is receiving any form of income that is non-wage income such as Self-employment Income, Investment Income, Social Security Benefits which is taxable, etc. then the taxpayer must make estimated tax payments in a quarterly manner.
So, the time for filing tax returns is running out and the taxpayers must be prepared enough to complete tax filing in time. These major 8 things if kept in mind can be helpful in making tax filing easier and on time without much hassle.