What is IRS tax return?

A Tax return includes all the documentation related to incomes, credits, deductions, employer withholds, earnings and other tax information that can help to understand your financial situation each pay period and sends them to the appropriate federal and state governments.

According with the Internal Revenue Services (IRS), the forms are divided into two main categories:

  • Individuals.
  • Business: Small business and self-employed, large business, corporations and partnerships.

How to fille your taxes?

1. Gather all of your tax documents:

Organize your tax documents as they come up. Set these documents in a folder marked for the tax year as soon as you get them so that they’re easily accessible when you start filing.

Save documents like Form 1098 if you paid mortgage interest of $600 or more you received during the year in the course, receipts from charities you donated to, documents for out-of-pocket health care expenses and other documents to help you lower your tax liability.

2. Determine whether to claim an adult child as a dependent:

The IRS permits for parents to claim their child as a dependent until age 19 or until 24, if the child attends college and is 24 years or younger at the end of the calendar year.

If, however, the child is permanently and totally disabled, in this case, your child cannot be able to engage in any substantial gainful activity due to the disability and the condition must have lasted at least one year.

3. Prepare if you owe money or will receive a refund

By the time you get to line 19 on your 1040, you’ll know whether you will owe money to the IRS or receive a refund.

What if I owe taxes?

The IRS will send you a statement in the mail with how much you owe and when to pay.

What to do if you receive a refund

If you receive a tax refund, you can either have the funds deposited directly into your bank account or have a paper check mailed to you.

What’s new when filing in 2021

This year, taxpayers who received an Economic Impact Payment should keep Notice 1444, Your Economic Impact Payment, with the 2020 tax records. They may be eligible to claim the Recovery Rebate Credit on their tax year 2020 federal income tax return if:

  • they didn’t receive an Economic Impact Payment, or
  • their Economic Impact Payment was less than $1,200 ($2,400 if married filing jointly for 2019 or 2018), plus $500 for each qualifying child they had in 2020.

If taxpayers didn’t receive the full amount of the Economic Impact Payment for which they were eligible, they may be able to claim the Recovery Rebate Credit when they file in 2021.

Individuals do not need to complete information about the Recovery Rebate Credit on tax year 2020 Form 1040 or 1040-SR when filing in 2021, unless eligible to claim an additional credit amount.

The IRS reminds taxpayers can track their refund using the Where’s My Refund? tool.

Sources:

https://www.irs.gov

https://www.thebalance.com

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