Important Information About This Tax Season
Many of us are concerned about tax season – especially after the year we’ve had. This year more than ever, we could use a financial boost to help us get by.
Up to two million families were on track to receive significantly lower refunds in 2021 compared to 2019 – up to 80% smaller.
If you are worried about your refund potential this year—we are here for you with help to find ways to maximize your tax refund. While we may not be tax experts, we are committed to sharing options and resources available to help you receive that financial boost when you need it most.
This past year was stressful, and like a perfect storm we battled both the pandemic and economic conditions of our country. And whether it was a lost job, or earning less income in 2020—it has made for a much more challenging 2021 tax season for many of us.
We know many people rely on their tax refund for a much needed infusion of income for their household. This tax season we want to ensure everyone benefits from the information and resources available.
Things to consider
Congress passed a tax “lookback rule” as part of the latest COVID-19 stimulus package, this rule means:
- If you earned less income in 2020, you could use either your 2019 or 2020 income on your taxes—whichever one gets you the most money back.
- If you consider using 2019 income, note that for most people—gathering all the necessary documents can be the biggest hurdle. It can save you a lot of stress if have your 2019 tax return on hand before filing.
Did you know that every year about five million potentially eligible people miss out on the chance to claim the Earned Income Tax Credit, or EITC?
Don’t miss out on unclaimed tax refunds
- The Earned Income Tax Credit helps working Americans by issuing a credit when filing taxes.
- One important piece in qualifying for the Earned Income Tax Credit is filing a federal income tax return for the tax year. This measure can be confusing because it is a requirement even if you do not owe any tax, or are not required to file a tax return.
- If you’re not sure if you qualify, or if you usually don’t file taxes, you can use the Internal Revenue Service (IRS) Earned Income Tax Credit Assistant tool to calculate whether you’re eligible and how much money you could receive.
- Note: If you use the higher income year between 2019 and 2020 in order to get the Earned Income Tax Credit you have to use the same income you claimed in order to get the Lookback.
Claim your stimulus payments if you haven’t alreadyThe Federal government has sent out two rounds of stimulus checks and if you didn’t receive the full stimulus amount from either, or both of the stimulus payments, it’s not too late.
- Many people were eligible but didn’t receive either or both of the payments, the way to access those funds would be by filing taxes.
- Many people faced a loss in income in 2020, or had additional dependents in 2020, there may be a way to receive additional funds when you file your 2020 tax return.
Be prepared for obstacles as tax season beginsWe know many of our members may be struggling and concerned that they will receive a lower refund or worse still encounter a delay in receiving the funds. Having a plan can help reduce that stress, so we’d like to share some things to be aware of in navigating the obstacles of this tax season.
- Delayed tax season.
The Internal Revenue Service (IRS) usually begins accepting tax returns in late January, but due to the many challenging issues facing our country (such as the pandemic) the IRS tax season has been delayed.
- The IRS did not begin accepting federal tax returns for the 2020 tax year until February 12.
- Delay in refunds.
In some cases, you may end up waiting longer than usual to get your refund.
- Many people claiming the Earned Income Tax Credit and Child Tax Credit file their taxes early. Due to the many challenges, the IRS has stated it will not pay out tax refunds for returns claiming the credits before March.
- These credits in particular are associated with high levels of fraud, so if you claim either one, the IRS may have to hang on to your whole refund for a bit longer—not just the portion associated with one of these credits.
Don’t be afraid to ask for helpWhile we may not be tax experts, we are dedicated to sharing options and resources available to help you receive that financial boost when you need it most.
The IRS offers programs like Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) where those who qualify can receive free tax prep help from an IRS-trained volunteer.
- Volunteer Income Tax Assistance or Tax Counseling for the Elderly tax preparation sites are generally located at community and neighborhood centers, libraries, schools, shopping malls and other convenient locations across the country.
- To locate the nearest VITA or TCE site near your, call 800-906-9887, or visit the VITA/TCE Locator Tool.
- Look carefully at the website before going to a VITA or TCEC site to ensure you have all the required documents and information. The site offers the option to schedule an appointment in a location nearest to you.
Additional tax resources include:
- GetYourRefund.org for free, accessible help filing and get the biggest refund possible this tax season.
- Commonwealth Tax Time Crisis for news, tools and resources about tax refunds, the lookback rule and tax credits, including the Earned Income Tax Credit.