Titanium Taxes & Business Consulting

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Claiming the EITC - Taxpayer Advocate Service Claiming the EITC - The EITC is a tax credit for people who work and whose earned income is within a certain range.

https://finance.yahoo.com/amphtml/news/taxes-here-are-the-federal-tax-brackets-for-2023-vs-2022-155622114.html

Taxes: Here are the federal tax brackets for 2023 vs. 2022 The inflation-adjusted income thresholds for the seven tax brackets jumped by more than 7% from 2022.

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Your tax refund will likely be smaller this year. Here are more things to know — NPR The IRS starts accepting tax returns for 2022 on Jan. 23. A financial expert breaks down the changes from last year, and shares her tips for coping with tax season.

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A Homeowner’s Guide to Preparing for Tax Season | Stewart Title What do homeowners need to prepare as tax season approaches? From preparing documents for tax filing to home ownership deductions, there’s much to consider.

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https://finance.yahoo.com/amphtml/news/irs-issues-12-million-tax-refunds-after-correcting-2020-returns-205016861.html

IRS issues 12 million tax refunds after correcting 2020 returns The agency corrected 14 million 2020 tax returns related to unemployment compensation, resulting in $14.8 billion in refunds.

What's new and what to consider when you file in 2022
RECONCILE ADVANCE CHILD TAX CREDIT PAYMENTS
If you received advance payments, when you file your 2021 tax return, you will need to compare the advance Child Tax Credit payments that you received during 2021 with the amount of the Child Tax Credit that you can properly claim on your 2021 tax return. The fastest way for you to get your tax refund that will include your Child Tax Credit is by filing electronically and choosing direct deposit.
If you received less than the amount that you're eligible for, you'll claim a credit for the remaining amount of Child Tax Credit on your 2021 tax return. If you received more than the amount that you're eligible for, you may need to repay some or all of that excess payment when you file.
In January 2022, the IRS will send you Letter 6419 to provide the total amount of advance Child Tax Credit payments that you received in 2021. You need to keep this and any other IRS letters you received about advance CTC payments you received with your tax records and refer to them when you file.
See Reconciling Your Advance Child Tax Credit Payments on Your 2021 Tax Return for more information.
CLAIM RECOVERY REBATE CREDIT
Individuals who didn't qualify for third Economic Impact Payments or did not receive the full amount may be eligible for the Recovery Rebate Credit based on their 2021 tax situation. The fastest way for you to get your tax refund that will include your Recovery Rebate Credit is by filing electronically and choosing direct deposit.
If you received the full amount for your third Economic Impact Payment, you won't include any information about it when you file your 2021 tax return.
If you're eligible, you'll need to file a 2021 tax return even if you don't usually file to claim the Recovery Rebate Credit and you didn't get the full amount of the third Economic Impact Payment.
File an accurate return to avoid processing delays that slow your refund. You will need the amount of third Economic Impact Payment and any Plus-Up Payments you received to calculate your 2021 Recovery Rebate Credit amount using the 2021 RRC Worksheet or tax preparation software.
In early 2022, the IRS will send you Letter 6475 to provide the total amount of the third Economic Impact Payment and any Plus-Up payments that you received. You need to keep

this and any other IRS letters you received about your stimulus payments with your tax records and refer to them when you file. Or you can log in to your online account to securely access your Economic Impact Payment amounts. If you are claiming a 2021 Recovery Rebate Credit, you will need the total amount of your third Economic Impact payment and any plus up payments to file your return accurately and avoid a refund delay.
Remember, only eligible individuals who did not qualify for a third Economic Impact Payment or did not receive the full amount should claim the Recovery Rebate Credit on a 2021 tax return. Do not include amounts of missing first or second stimulus payments on your 2021 return.
See IRS.gov/rrc for more information.
AVOID REFUND DELAYS AND UNDERSTAND REFUND TIMING
Many different factors can affect the timing of your refund after we receive your return. Although the IRS issues most refunds in less than 21 days, the IRS cautions taxpayers not to rely on receiving a refund by a certain date, especially when making major purchases or paying bills. Some returns may require additional review and may take longer. For example, the IRS, along with its partners in the tax industry, continue to strengthen security reviews to help protect against identity theft and refund fraud. Additionally, refunds for people claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) can't be issued before mid-February. The law requires the IRS to hold the entire refund − even the portion not associated with EITC or ACTC.
Some returns, filed electronically or on paper, may need manual review delaying the processing if our systems detect a possible error, is missing information, or there is suspected identity theft or fraud. Some of these situations require us to correspond with taxpayers, but some do not. This work does require special handling by an IRS employee so, in these instances, it may take the IRS more than the normal 21 days to issue any related refund. In those cases where IRS is able to correct the return without corresponding, the IRS will send an explanation to the taxpayer.

Recovery Rebate Credit | Internal Revenue Service Eligible individuals can claim the Recovery Rebate Credit on their Form 1040 or 1040-SR. These forms can also be used by people who are not normally required to file tax returns but are eligible for the credit.

6 Often Overlooked Tax Breaks You Don't Want to Miss!

Deductions, credits can mean the difference between a tax bill and a tax refund.

Are you worried because the deadline for filing federal income taxes is May 17 and your refund wouldn't buy a stamp to mail your tax return? Or are you scared that you're going to have to pay a big tax bill? Stop wailing and rending your garments and read these six tax tips that could help reduce your 2020 taxes. You never know: You might be able to turn that tax bill into a refund.

1. Traditional IRA contributions
You have until May 17 to make a contribution to a traditional IRA for the 2020 tax year. Your contribution can reduce your taxable income, which, in turn, would reduce the amount of tax you owe. You can contribute up to $6,000 per person under the age of 50 for 2020. People who are 50 and older can contribute up to $7,000. You can only contribute earned income to an IRA; Social Security payments, pension payouts, dividends and other types of income don't count.
If neither you nor your spouse is covered by a workplace retirement plan such as a 401(k), you can deduct the full amount of your contribution. The deduction faces limits if you or your spouse is covered by a retirement plan at work, or if your modified adjusted gross income (MAGI) exceeds certain levels.
And here's another nice thing about this tax year: There is no longer an age limit on making contributions to a traditional IRA. Prior to 2020, the cutoff was age 70 1/2. There also is no age limit for contributing to a Roth IRA, but note that Roth contributions aren't tax deductible, since withdrawals in retirement are tax-free.

2. Health savings accounts (HSAs)
As with IRAs, you have until May 17 to make an HSA contribution for the 2020 tax year. The maximum annual contribution you can make is $3,550 for yourself only, or $7,100 for families. If you're 55 or older, you can toss in another $1,000.
The catch: You need to be insured by a high-deductible health plan (HDHP) to make a contribution. To qualify as an HDHP for 2020, the plan must have a minimum annual deductible of $1,400 for individuals and $2,800 for families. It also must have an out-of-pocket maximum of $6,900 for individuals and $13,800 for families.

3. Unemployment benefits
If you received state unemployment benefits last year, you may have gotten something unwelcome in the mail: Form 1099-G, which shows you how much your unemployment benefits were. Why is this unwelcome? Those benefits are taxable.
Fortunately, the American Rescue Plan Act, signed into law in March, excludes from income up to $10,200 of unemployment compensation paid in 2020, which means you don't have to pay tax on that amount. If you are married, each spouse receiving unemployment compensation doesn't have to pay tax on unemployment compensation of up to $10,200. Amounts over $10,200 for each individual are still taxable. Those with adjusted gross income of $150,000 or more aren't eligible for the exemption.

4. Student loan interest
Most people know that mortgage interest is deductible, but most student loan interest is deductible, too. You can deduct up to $2,500 in interest each year, or the amount you actually paid, whichever is smaller. The deduction for single filers and heads of households phases out between $70,000 in modified adjusted gross income (MAGI) and $85,000 in MAGI. For married couples filing jointly, the deduction starts to phase out at $140,000 in MAGI and ends at $170,000.

5. Charitable donations
Even if you're taking the standard deduction, you can deduct up to $300 on your tax return for charitable donations. Like student loan interest, this is an above-the-line deduction.
This deduction has to be for charitable deductions you made in 2020. And the deductions must have been made in cash; clothing, household items or used cars don't count. Items donated to charity are eligible for a deduction if you itemize.
The $300 is “per tax unit” for 2020, which means that single filers and joint filers only get $300 per return. In the 2021 tax year, the charitable deduction for cash donations increases to $300 per filer, so married couples filing jointly could each claim $300, for a total of $600.

6. Long-term care expenses
Sometimes an extra deduction will take you over a high hurdle — such as the current standard deduction. You need to have more in itemized deductions than the standardized deduction to make itemizing worthwhile. In the 2020 tax year, the standard deduction is $12,400 for single filers, $18,650 for heads of household and $24,800 for married people filing jointly. It's even bigger for taxpayers 65 and older. The standard deduction is so large today that just 14 percent of the population itemizes.
If you're close to overcoming the standard deduction, however, don't forget to deduct the premiums you pay for long-term care insurance. This counts as a medical expense deduction, which means you can only deduct the amount of your qualifying medical expenses that exceed 7.5 percent of your adjusted gross income. If you had adjusted gross income of $50,000, for example, you could only deduct the medical expenses that exceed $3,750.Call Titanium Taxes today doe more information or to schedule a tax preparation appointment, 951-595-7374.

https://apple.news/AZsQBv4LkTW-0UYC9BXCAxA

IRS will refund unemployment insurance taxes in May. Here's who qualifies — CNBC Taxpayers who received unemployment income in 2020 and filed their taxes early in the year may receive a refund from the IRS next month.

IRS says there are no plans to extend tax-filing deadline beyond April 15

In mid-January, the IRS said it would begin accepting returns on Feb. 12 — a later date than usual.
Last year, the tax-filing deadline was pushed off to July 15 from April 15.

Don't count on having extra time to get your tax return filed this year like you did in 2020.

Last year, in the midst of Covid-related shutdowns, the agency ended up pushing the deadline for 2019 returns to July 15, giving individuals and businesses an extra 90 days to file and pay any amount owed. The IRS also had delayed the 2020 due dates for first- and second-quarter estimated payments.

If you will need more time to prepare and file your tax return, you can always request an extension from the IRS. Be aware that this won't grant you more time to pay what you owe without facing potential penalties.
The agency expects more than 150 million tax returns to be filed this year, with the vast majority before the April 15 deadline. The average refund last year was about $2,500.

Everyone should file taxes this year due to Covid.
It could get you more financial relief
Tax season is coming up, and this year, in particular, there's a big reason for everyone to file a return, regardless of how much money they made last year.
That's because the coronavirus pandemic has ushered in some key changes that make filing a return critical, even if you aren't likely to get a large refund.
You may need to file to claim your stimulus checks
The most important reason that low-income Americans who previously didn't need to file a tax return should do so this year is to claim the economic impact payments that they're eligible for.
Non-filers — generally single, low-income adults without children — likely didn't receive any of the stimulus payments that have gone out so far, as the federal government used IRS data to send them to Americans. Those who didn't receive payments can claim them as a recovery rebate credit by filing a 2020 tax return.
This will be a significant payment for people,in that individuals could get up to $1,800 —$1,200 from the first payment and $600 from the second.
Having a tax return on hand will also help if there is further stimulus. Those who have filed will have provided the IRS with either their mailing address or direct deposit information, so the agency will know where to send any future payments.
It's also important that people who didn't get the full amount of stimulus payment that they were eligible for file a tax return to claim the recovery rebate credit.
This includes people that had a significant drop in income in 2020 from 2019 that would have meant a larger payment, as well as those who have a dependent child in their household that they didn't have last year or a new baby eligible for a check.
You may be eligible for more credits this year
In addition, Americans may be eligible for different credits this year due to the coronavirus pandemic.
Most important, low- to medium-income Americans are generally able to take advantage of the earned income tax credit, a tax break which can be used to lower the amount families owe and potentially lead to a bigger refund. In 2020, the maximum credit for someone with no qualifying children is $538, and the most a family with three or more children could receive is $6,660, according to the IRS.
Some Americans who didn't previously claim the earned income tax credit may be able to this year, depending on how much money they made. And, non-filers who submit a return for the first time for 2020 can look back over the last three years to see if they were eligible and retroactively file to claim the credit.
Other changes will also ensure that families get the maximum credit they need, even if they lost income because of Covid. If you claimed the earned income credit in 2019 but had lower income in 2020, you can use your 2019 income again to claim the credit.
There are other credits that families may be eligible for or can use their 2019 income to claim in 2020, such as the child tax credit. Call Titanium Taxes & speak to an IRS Enrolled Agent to discuss any of your additional questions at 951-595-7374.

Titanium Taxes & Business Consulting updated their business hours.

EITC Awareness Day: Critical tax credit provides a significant refund boost to millions

Earned Income Tax Credit – Get it Right – English | Spanish | ASL

WASHINGTON – The Internal Revenue Service and partners across the nation remind taxpayers about the Earned Income Tax Credit today on “EITC Awareness Day” 2021. The IRS and partners nationwide urge people to check to see if they qualify for this important credit.

“This year marks the 15th annual EITC Awareness Day,” said IRS Commissioner Chuck Rettig. “For more than 45 years, this tax credit has been helping hard-working Americans and their families. We want to thank our partners around the country who help us reach out to those low- and moderate-income people who may qualify and not even know about it.”

The IRS earlier announced that it will begin accepting 2020 tax returns on Feb. 12. Once filing season officially opens, the returns will be electronically submitted for processing. The IRS reminds taxpayers that the quickest way to get a tax refund is by filing electronically and choosing direct deposit for their refund.

New look-back rule
Under the COVID-related Tax Relief Act of 2020, taxpayers can use their 2019 earned income to figure their 2020 EITC if their 2019 earned income was more than their 2020 earned income. To qualify for EITC, people must have earned income, so this option may help workers who earned less in 2020, or received unemployment income instead of their regular wages, get bigger tax credits and larger refunds in the coming year.

Also, any Economic Impact Payments received are not taxable or counted as income for purposes of claiming the EITC. Eligible individuals who did not receive the full amounts of both Economic Impact Payments may claim the Recovery Rebate Credit on their 2020 tax return. See IRS.gov/rrc for more information.

Vital refund boost
The EITC is the federal government’s largest refundable federal income tax credit for low- to moderate-income workers. For those who qualify, and if the credit is larger than the amount of tax they owe, they will receive a refund for the difference. While the majority of those eligible claim EITC every year, IRS estimates that one of five eligible taxpayers do not claim the credit.

Taxpayers earning $56,844 or less can see if they qualify using the EITC Assistant tool at www.irs.gov/eitc. The EITC Assistant, available in English and Spanish, helps users determine if they are eligible, have a qualifying child or children and estimates the amount of the EITC they may get. If an individual doesn’t qualify for the EITC, the Assistant explains why.

Nationwide in 2020, more than 25 million taxpayers received over $62 billion in EITC. The average EITC amount received was $2,461 per return. The EITC is worth as much as $6,660 for a family with three or more children or up to $538 for taxpayers who do not have a qualifying child.

Refunds
By law, the IRS cannot issue refunds before mid-February for tax returns that claim the EITC or the Additional Child Tax Credit (ACTC). The IRS must hold the entire refund − even the portion not associated with EITC or ACTC and the Recovery Rebate Credit if applicable. This helps ensure taxpayers receive the refund they deserve and gives the agency more time to detect and prevent errors and fraud.

'Where’s My Refund?' on IRS.gov and the IRS2Go app will be updated with projected deposit dates for most early EITC/ACTC refund filers by Feb. 22. Therefore, EITC/ACTC filers will not see an update to their refund status for several days after Feb. 15. The IRS expects most EITC or ACTC related refunds to be available in taxpayer bank accounts or on debit cards by the first week of March, if they choose direct deposit and there are no other issues with their tax return.

Workers who can claim the EITC
Workers at risk for overlooking this important credit can include taxpayers:

Without children

Living in non-traditional families, such as a grandparent raising a grandchild

Whose earnings declined or whose marital or parental status changed

With limited English language skills

Who are members of the armed forces

Living in rural areas

Who are Native Americans

With disabilities or who provide care for a disabled dependent

Life events or changes may make people eligible for certain tax benefits like the EITC. The IRS urges people to use the EITC Assistant to check their eligibility for this valuable credit.

How to claim the EITC
To get the EITC, workers must file a tax return and claim the credit. Eligible taxpayers are urged to claim the credit even if their earnings were below the income requirement to file a tax return.

Find a trusted tax professional. The IRS also reminds taxpayers that a trusted tax professional can prepare their tax return and provide helpful information and advice. Tips for choosing a return preparer and details about national tax professional groups are available on IRS.gov. EITC recipients should be careful not to be duped by an unscrupulous return preparer.

The IRS reminds taxpayers to be sure they have valid Social Security numbers (SSN) for themselves, their spouse, if filing a joint return, and for each qualifying child claimed for the EITC. The SSNs must be issued before the due date of the return, including extensions. There are special rules for those in the military or those out of the country.

Avoid errors
Taxpayers are responsible for the accuracy of their tax return even if someone else prepares it for them. Since the rules claiming the EITC can be complex, the IRS urges taxpayers to understand all of them. People can find help to make sure they are eligible by visiting a free tax return preparation site, or using Free File software or by using a paid tax professional.

Beware of scams
Be sure to choose a tax preparer wisely. Beware of scams that claim to increase the EITC refund. Scams that create fictitious qualifying children or inflate income levels to get the maximum EITC could leave taxpayers with a penalty.

Visit IRS online
IRS.gov is a valuable first stop to help taxpayers get it right this filing season. Information on other tax credits, such as the Child Tax Credit, is also available.

Don't bank on that refund yet.

April tax season may come as a big surprise.

Changes to federal taxes enacted under the Tax Cuts and Jobs Act means many people who didn't update their W-4 form likely had less tax withheld from each paycheck in 2020.

Many who lost work due to Covid and went on unemployment will owe tax on their benefits, too.

A new W-4 form and a pandemic-dominated 2020 may have millions of Americans receiving smaller refunds, or even owing money to the government, this year.

Two major factors could spoil the springtime refund euphoria. The first is the new W-4 form introduced under the Tax Cuts and Jobs Act that governs withholding from employee paychecks. After a one-year implementation delay in 2019, the major changes in the new form took full effect last year and it could be a shock for many taxpayers.

If you think your tax bill is chiseled in stone at the end of the year, think again. Though it’s true that most money-saving options to defer income or accelerate deductions become much more limited after December 31, there is still a lot you can do to make the tax-filing season cheaper and easier. Here are 10 tax tips for the new year to help you lower your taxes, save money when preparing your tax return, and avoid tax penalties.
1. Contribute to retirement accounts
If you haven’t already funded your retirement account for 2020, do so by April 15, 2021. That’s the deadline for contributions to a traditional IRA, deductible or not, and to a Roth IRA.
If you have a Keogh or SEP and you get a filing extension to October 15, 2021, you can wait until then to put 2020 contributions into those accounts.
To start tax-free compounding as quickly as possible, however, don’t dawdle in making contributions.
Making a deductible contribution will help you lower your tax bill this year. Plus, your contributions will compound tax-deferred. It’s hard to find a better deal.
If you put away $5,000 a year for 20 years in an investment with an average annual 8% return, your $100,000 in contributions will grow to $247,000.
The same investment in a taxable account would grow to only about $194,000 if you’re in the 25% federal tax bracket (and even less if you live in a state with a state income tax to bite into your return).
To qualify for the full annual IRA deduction in 2020, you must:
not be eligible to participate in a company retirement plan, or
if you are eligible, you must have adjusted gross income of $65,000 or less for singles, or $104,000 or less for married couples filing jointly.
If you are not eligible for a company plan but your spouse is, your traditional IRA contribution is fully-deductible as long as your combined gross income does not exceed $196,000.
For 2020, the maximum IRA contribution you can make is $6,000 ($7,000 if you are age 50 or older by the end of the year). For self-employed persons, the maximum annual addition to SEPs and Keoghs for 2020 is $57,000.
Although choosing to contribute to a Roth IRA instead of a traditional IRA will not cut your 2020 tax bill—Roth contributions are not deductible—it could be the better choice because all withdrawals from a Roth can be tax-free in retirement.
Withdrawals from a traditional IRA are fully taxable in retirement. To contribute the full $6,000 ($7,000 if you are age 50 or older by the end of 2020) to a Roth IRA, you must earn $124,000 or less a year if you are single or $196,000 if you’re married and file a joint return.
The amount you save for making a contribution will vary. If you are in the 25% tax bracket and make a deductible IRA contribution of $6,000, you will save $1,500 in taxes the first year. Over time, future contributions will save you thousands, depending on your contribution, income tax bracket, and the number of years you keep the money invested.
2. Make a last-minute estimated tax payment
If you didn’t pay enough to the IRS during the year, you may have a big tax bill staring you in the face. Plus, you might owe significant interest and penalties, too.
According to IRS rules, you must pay 100% of last year’s tax liability or 90% of this year’s tax or you will owe an underpayment penalty If your adjusted gross income for 2019 was more than $150,000, you have to pay more than 110% of your 2019 tax liability to be protected from a tax year 2020 underpayment penalty.
If you make an estimated payment by January 15, you can erase any penalty for the fourth quarter, but you still will owe a penalty for earlier quarters if you did not send in any estimated payments back then.
But, if your income windfall arrived after August 31, 2020, you can file Form 2210: Underpayment of Estimated Tax to annualize your estimated tax liability, and possibly reduce any extra charges.
A note of caution: Try not to pay too much. It’s better to owe the government a little rather than to expect a refund. Remember, the IRS doesn’t give you a dime of interest when it borrows your money.
3. Organize your records for tax time
Good organization may not cut your taxes. But there are other rewards, and some of them are financial. For many, the biggest hassle at tax time is getting all of the documentation together. This includes last year’s tax return, this year’s W-2’s & 1099’s receipts and so on.
How do you get started?
Keep all the information that comes in the mail in January, such as W-2s, 1099s and mortgage interest statements. Be careful not to throw out any tax-related documents, even if they don’t look very important.
Collect receipts and information that you have piled up during the year.
Group similar documents together, putting them in different file folders if there are enough papers.
Make sure you know the price you paid for any stocks or funds you have sold. If you don’t, call your broker before you start to prepare your tax return.
Know the details on income from rental properties. Don’t assume that your tax-free municipal bonds are completely free of taxes. Having this type of information at your fingertips will save you another trip through your files.
4. Find the right tax forms
You won’t find all of them at the post office and library. Instead, you can go right to the source online.
View and download a large catalog of forms and publications at the Internal Revenue Servicewebsite or have them sent to you by mail.
You can search for documents as far back as 1980 by number or by date.
The IRS also will direct you to sites where you can pick up state forms and publications.
5. Itemize your tax deductions
It’s easier to take the Standard deduction but you may save a bundle if you itemize, especially if you are self-employed, own a home or live in a high-tax area.
Itemizing is worth it when your qualified expenses add up to more than the 2020 standard deduction of $12,400 for most singles and $24,800 for most married couples filing jointly.
Many deductions are well known, such as those for mortgage interest and charitable donations.
You can also deduct the portion of medical expenses that exceed 7.5% of your adjusted gross income for 2020.
6. Don't shy away from a home office tax deduction
The eligibility rules for claiming a home office deduction have been loosened to allow more self-employed filers to claim this break. People who have no fixed location for their businesses can claim a home office deduction if they use the space for administrative or management activities, even if they don’t meet clients there.
As always, you must use the space exclusively for business.
Many taxpayers have avoided the Home office deduction because it has been regarded as a red flag for an audit. If you legitimately qualify for the deduction, however, there should be no problem.
You are entitled to write off expenses that are associated with the portion of your home where you exclusively conduct business (such as rent, utilities, insurance and housekeeping). The percentage of these costs that is deductible is based on the square footage of the office to the total area of the house.
A middle-class taxpayer who uses a home office and pays $1,000 a month for a two-bedroom apartment and uses one bedroom exclusively as a home office can easily save $1,000 in taxes a year. People in higher tax brackets with greater expenses can save even more.
One home office trap that used to scare away some taxpayers has been eliminated.
In the past, if you used 10% of your home for a home office, for example, 10% of the profit when you sold did not qualify as tax-free under the rules that let homeowners treat up to $250,000 of profit as tax-free income ($500,000 for married couples filing joint returns).
Since 10% of the house was an office instead of a home, the IRS said, 10% of the profit wasn’t tax-free. But the government has had a change of heart. No longer does a home office put the kibosh on tax-free profit.
You do have to pay tax on any profit that results from depreciation claimed for the office after May 6, 1997. It’s taxed at a maximum rate of 25%. (Depreciation produces taxable profit because it reduces your tax basis in the home; the lower your basis, the higher your profit.)
7. Provide dependent taxpayer IDs on your tax return
Be sure to plug in Taxpayer Identification Numbers (usually Social Security Numbers) for your children and other dependents on your return. Otherwise, the IRS will deny any dependent credits that you might be due, such as the Child tax credit.
Be especially careful if you are divorced. Only one of you can claim your children as dependents, and the IRS has been checking closely lately to make sure spouses aren’t both using their children as a deduction. If you forget to include a Social Security number for a child, or if you and your ex-spouse both claim the same child, it’s highly likely that the processing of your return (and any refund you’re expecting) will come to a screeching halt while the IRS contacts you to straighten things out.
After you have a baby, be sure to file for your child's Social Security card right away so you have the number ready at tax time. Many hospitals will do this automatically for you.
If you don’t have the number you need by the tax filing deadline, the IRS says you should file for an extension rather than sending in a return without a required Social Security number.
8. File and pay on time
If you can’t finish your return on time, make sure you file Form 4868 by April 15, 2021. Form 4868 gives you an extension of the filing deadline until October 15, 2021. On the form, you need to make a reasonable estimate of your tax liability for 2020 and pay any balance due with your request. Requesting an extension in a timely manner is especially important if you end up owing tax to the IRS.
If you file and pay late, the IRS can slap you with a late-filing penalty of 4.5% per month of the tax owed and a late-payment penalty of 0.5% a month of the tax due.
The maximum late filing penalty is 22.5% and the late-payment penalty tops out at 25%.
By filing Form 4868, you stop the clock running on the costly late-filing penalty.
9. File electronically
Electronic filing works best if you expect a tax refund. Because the IRS processes electronic returns faster than paper ones, you can expect to get your refund three to six weeks earlier. If you have your refund deposited directly into your bank account or IRA, the waiting time is even less.
There are other advantages of e-filing besides a fast refund:
The IRS checks your return to make sure that it is complete, which increases your chances of filing an accurate return. Less than 1% of electronic returns have errors, compared with 20% of paper returns.
The IRS also acknowledges that it received your return, a courtesy you don’t get even if you send your paper return by certified mail. That helps you protect yourself from the interest and penalties that accrue if your paper return gets lost.
If you owe money, you can file electronically and then wait until the federal tax filing deadline to send in a check along with Form 1040-V. You may be able to pay with a credit card or through a direct debit.
With a credit card, expect to pay a service charge of as much as 2.5%.
With direct debit, you may delay the debiting of your bank account until the actual filing deadline.
10. Decide if you need help
Titanium Taxes can handle the most complex returns with ease (and allow you to file your taxes electronically for a faster refund). You just need to answer simple questions, such as whether you've had a baby, bought a home or had some other life-changing event in the past year. Titanium Taxes will then fill out all the right forms for you.
If you are concerned about preparing your own return, www.TitaniumTaxes.com offers some additional services that you can purchase when preparing your return that will give you added confidence and peace of mind. For example, you can talk to a tax professional to get your questions answered, or purchase Audit Defense coverage so that you are professionally represented in the event of an audit.

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