Take advantage of free online tax filing
Tax filing season for the year 2020 is upon us. For many people, it will be both a challenge and an opportunity. The challenge may come in electronic filing for those who have used paper returns in the past. But the opportunity lies in getting your unpaid but deserved stimulus refund deposited to your account within weeks. The entire process will be complicated for those who are victims of unemployment identity theft. Identity theft tax issues
Some taxpayers may receive Form 1099-G from state governments for unemployment benefits they did not receive. Suddenly, they will realize they are victims of identity theft. If this happens to you, you should report it immediately on your state’s unemployment website.
Here’s a message from the IRS: “Taxpayers who receive an incorrect Form 1099-G for unemployment benefits they did not receive should contact the issuing state agency to request a revised Form 1099-G showing they did not receive these benefits. Taxpayers who are unable to obtain a timely, corrected form from states should still file an accurate tax return, reporting only the income they received.”
It may take months before the IRS contacts you about the discrepancy between the state 1099 and your 1040. So keep proof, even a screen shot, of your attempt to report theft. Why file electronically?
The IRS is still processing paper returns taxpayers filed last year amid the pandemic. Many people have not yet received their 2019 tax refunds! The fact that interest will be paid on those amounts is small consolation.
For 2020, it is clearly wise to file electronically. Filing season starts Feb. 12. If you haven’t yet received the Economic Impact Payments (stimulus) sent to most Americans last year, the IRS has promised that it will direct-deposit those payments in early March if you file immediately, or within three weeks of filing electronically.
To get help with electronic tax filing, use the IRS’ FreeFile alliance program offered in association with most well-known tax preparation companies. It is available if your adjusted gross income is below $72,000. Start the process at IRS.gov/FreeFile, which provides links to all participating tax preparers. Most of the FreeFile partner firms include one free state filing as well.
The IRS also has a link to its Volunteer Income Tax Assistance (VITA) program for the elderly, which offers in-person counseling for those earning $57,000 or less or who are disabled or have problems speaking English. You can search locations on the IRS website, but because of the pandemic, most in-person sites will not be operating this spring. Last chance to get stimulus payment
You’re not required to file unless your 2020 gross income was at least $12,400 as a single filer or $14,050 if you are single and 65 and older. For those under 65 and married filing jointly, you must file if your income was over $24,800. The filing requirement if both are over 65 is income over $27,400.
But this year, many people under those income limits will file in order to get their refundable Economic Impact Payments: both the $1,200 stimulus from last year and the $600 from this year (or any portion that was not paid out already).
You’ll claim those refundable credits on Line 30 of your 1040. Remember you are eligible for each full stimulus if your 2020 adjustable gross income on the return you are now filing was less than $75,000 on a single return, or $150,000 on a joint return.
To qualify for this refund, make sure you are not eligible to be listed as a dependent on anyone else’s return for 2020, and that you have provided at least half of your own support. Then file your return electronically, input your banking information and get both stimulus payments direct-deposited.
Filing tax returns is always a challenge and a chore. But this year there is a great incentive to file electronically and add your direct-deposit banking information. And there’s plenty of free help available. It’s time to make the change. And that’s The Savage Truth. Terry Savage is a registered investment adviser and the author of four bestselling books. She responds to questions on her blog at TerrySavage.com.