It’s springtime, which means the birds are singing, the flowers are blooming, the weather’s getting warmer… and it’s time to file your taxes.
Yep. In a year when everything stood still, the old tax system marches on. But there are some significant changes for filers in general, and for those over age 65 in particular. According to AARP, these are the ones that will affect you most:
Tax-Filing Day Has Changed
“Because of COVID” (won’t it be nice to never hear those words again?), the tax filing deadline for your 2020 earnings had moved from April 15 to May 17. The IRS is still working a backlog of 2019 taxes filed later than usual. In addition, the $600 Stimulus from the end of December threw a monkey wrench in the works that required some last-minute changes. The IRS also started processing 2020 returns later: February 12 instead of January 27.
Penalties Will Accrue Beginning May 18
If you cannot meet the new deadline of May 17, you must file an extension request before that date, or penalties will begin to accrue the very next day. Penalties amount to 5% of the taxes you owe for each month (or partial month) in which your taxes are late.
Stimulus Checks Are NOT Taxable
Stimulus payments received in 2020 are not taxable. However, if you received Unemployment Benefits in 2020, those payments may be subject to tax. (Check with your tax professional if you have specific questions about Unemployment payments.)
You Can Claim The Missing Funds
If you did not receive a Stimulus payment in 2020 but were entitled to one, you can claim the missing funds on your taxes as a credit against your 2020 return using the Recovery Rebate Credit. Missing funds will offset taxes you may owe, or take the form of a refund if you do not owe taxes.
The increased medical deduction of 10% (up from 7.5%) is now permanent.
Filers using the Standard Deduction may claim up to $300 in charitable deduction credits without having to itemize. (The $300 is the maximum, whether filing Single or Married/Filing Jointly.)
Grace Period Extension for Deferred Payments
Those who deferred tax payments in 2020 because of the pandemic have until the end of 2021 to repay their taxes.
65+ -Specific Changes:
Bigger Standard Deductions
The Standard Deduction for individuals ages 65 and over is now $12,400 for individuals, or $24,800 for Married Filing Jointly, an increase of $200 per individual or $300 for couples.
Adults born before January 2, 1956 may be eligible to use their own tax form – the 1040-SR. For complicated tax returns (those with additional income, business income, unemployment income, or winnings from prize money or gambling, or several other special situations, are required to file their form with similar schedules to those used on the traditional 1040 form).
Remember to apply for your Homestead Exemption if you have recently closed on your Windsong home, and check with your Tax Professional to ensure you receive all of the benefits to which you are entitled.
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