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The IRS also did something that was almost unprecedented during the year — it postponed Tax Day, pushing the filing deadline back from April 15 to July 15, 2020.
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Needless to say, if you’ve got tax questions, you are not alone. The following is a summary of some of the most common tax questions complete with the most up-to-date and accurate answers and information. Tax Day will be here before you know it, and while you don’t have to pay just yet, it’s never too early to find answers to your most pressing tax questions.
Last updated: Jan. 15, 2021
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Should I Take the Standard Deduction or Itemize?
In 2020, the standard deduction is $12,400 for single filers or $24,800 for married couples filing jointly. With no limitations on itemized deductions, you can literally write off every expense that can legally be deducted from your taxable income. If you have enough of those expenses to add up to more than $12,400 or $24,800, you should itemize. If not, take the standard deduction.
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What’s the Difference Between a Tax Credit and a Tax Deduction?
Tax credits, which can be either refundable or nonrefundable, are applied to the amount of tax you owe to lower your bill or increase your refund. Tax deductions, on the other hand, are items that reduce the amount of your income that can be taxed.
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When Are Taxes Due?
All tax returns for tax year 2020 must be filed by April 15, 2021, which is also the deadline for all payments owed to the IRS unless an extension has been granted. It’s important to note that in 2020, the IRS extended the filing deadline by three months to July 15 to help with the impact of the pandemic. No such extension has been granted for this year.
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How Do I File a Tax Return?
You can file a federal tax return at no cost directly through the IRS’ Free File system. You can also use the IRS Tax Counseling for the Elderly (TCE) and Volunteer Income Tax Assistance (VITA) programs to get help filing for free if you qualify. There are also many commercial software options, including big names like TurboTax, TaxSlayer and Credit Karma. Many offer both free and paid versions of their services. Finally, there’s always the option of hiring a professional who is an authorized e-file provider.
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When Will I Get My Refund?
The IRS generally starts accepting returns and processing refunds in late January. Nine out of 10 refunds arrive within 21 days, with one big caveat. About 80% of all filers receive refunds through direct deposit. Those who still rely on the mail should expect significant delays, particularly now with COVID-19 affecting mail and shipping times. The IRS urges everyone to sign up for direct deposit, and if 21 days pass with no refund, use the IRS’ “Where’s my Refund?” tool.
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What If I Can’t Afford To Pay the Tax I Owe?
Always file a tax return by April 15 whether you can afford to pay your tax bill or not. When you do file, pay whatever you can to reduce your bill. Rest assured, the IRS will contact you about the rest. When they do, you’ll be able to work out a payment plan in most cases, and that can help you stretch your bill out into agreed-upon monthly installments.
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