SAN ANTONIO — This is what you want to hear as a taxpayer:
“Refunds should be bigger than ever,” said Mark Steber, chief tax information officer at Jackson Hewitt.
Yet, there is always a caveat. Here it is:
“There’s some work that’s going to be necessary to get that big refund,” Steber said.
Being early and accurate are the keys to getting your money back quickly.
“If you have a glitch, if you have a mismatch, if you leave something off, if something’s not accurate, you’re going to get that delay situation,” Steber said. “No question whatsoever.”
Start by saving your statements the IRS will send you in the mail for the third stimulus payment (Letter 6475) and the advanced child tax credit (Letter 6419).
“You need to report these payments and see whether or not you qualify for more payments,” said Kemberly Washington, Forbes Advisor’s tax analyst and CPA, who formerly worked for the IRS.
Good news: Many parents will still qualify for an additional 50 percent of the child tax credit.
“People got some of their money, but they’ll have to file it on their tax return to get the other half,” Steber said. “Plus, any new money for a new child that may have come onto the tax return, born in 2020, one adopted, fostered or shared rotation of custody. Any other reason that a child is now on your tax return. You may get the whole $3,600 or $3,000, and that’s a pretty big thing for most Americans.”
Work from home is still ongoing for many of us. The bad news is most of us cannot claim a deduction for a home office.
“If you’re just an employee, you don’t get the deduction for home office, even if you have one,” Steber said. “On the other hand, if you have a home-based business, part-time or full-time or in addition to your W-2 job, then, yes, you probably do meet the qualifying criteria.”
Good news on charitable deductions:
“If you gave up to $300, you don’t need to itemize,” Washington said. “If you’re single, you can claim that amount and if you’re married, you can claim up to $600.”
The IRS already said there will be delays for refunds, so make it easy for them and you by doing this:
“Make certain that you file electronically, and you also include your bank information for direct deposit,” Washington said. “Because if you don’t file electronically, of course, that can delay it. Even more, it takes a longer time to process paper tax returns if you don’t include your bank information, which could also delay it more because you’re waiting on a paper check."
"So not only are you waiting on the IRS, but you’re waiting on the mail, so that could cause delays. You want to make certain that you’re taking your time, putting your information correctly, reviewing it before you hit submit, before you put in the mail.”
Here is a good rule of thumb about whether or not to spend the money on a CPA to help you file your taxes:
“If you’re someone with just a W-2, maybe a little bit of interest in dividends, I would, as a CPA, recommend, hey, do your taxes on your own,” Washington said. “But if you’re someone with a complex situation, maybe you have rental property, you have a lot of itemized deductions, you have just a lot of deductions throughout the year or maybe have business income, if you’re self-employed, those individuals, they may want to seek a professional to help them with their taxes.”
There is free help available online through the IRS’s Volunteer Income Tax Assistance and the Free File programs. You will need to go online to access them. The IRS asks you only call for help as a last resort.
Plus, there is a little-known way to completely wipe out a tax penalty if you get hit with one.
“You may qualify for what’s called the first-time penalty abatement,” Washington said. “A lot of people don’t know that, but you simply have to pick up the phone and let them know, hey, I receive this large penalty. I want it abated.”
It is only available if you have not had a penalty before.
The IRS says refunds take about 21 days. The deadline to file is April 18.