The 2020 tax season was quite the ride for many of us, with tax deadline extensions and pandemic restrictions. In 2021, the filing deadline is back to April 15. The IRS has not yet announced when they’ll begin to accept filings.
The IRS has strongly suggested that everyone e-file their returns to avoid delays from staffing issues due to COVID-19 guidelines. If you’re hoping for a hassle-free tax season, here are a few key points to ensure you’re prepared and ready when it’s time to file.
Is direct deposit for tax refund faster?
Yes, when you e-file with a direct deposit to your primary checking account you could get your refund in 21 days or less. For 2021, the IRS is recommending that everyone e-file if possible, to combat a delay in returns. Once your return is submitted, use this Where’s My Refund? tool to check the status.
How to change your direct deposit for your tax refund?
If you file your tax return yourself, you can update your direct deposit information in your tax software or have your tax preparer update it for you.
Need a new account for your tax refund direct deposit? Sign up for a $1/month RoarMoney account, and get instant access to your virtual debit card. Find your account and routing information by following these simple steps, and change your direct deposit in minutes without a physical card or check.
Is early tax filing available in 2021?
The IRS has yet to release the date of when they’ll start accepting tax returns for 2021 returns, but if you claim the Earned Income Tax Credit (EITC)1 or Additional Child Tax Credit (ACTC)² on your tax return, they cannot issue your refund before mid-February.
If you owe back taxes will your refund be delayed?
Any back taxes owed will automatically be applied to the balance you owe. We strongly suggest you set up a payment plan with the IRS if you owe taxes. If you’re not able to pay the taxes you owe by your original filing due date, you will be subject to interest and a monthly late payment penalty.
Set up your online payment plan using the Online Payment Agreement Application or call 800-829-1040 (individuals) or 800-829-4933 (businesses) for assistance.
For more information about tax payments, visit the IRS’ “Tax Topics” page.
Should you be doing your own taxes?
If forking up a few hundred dollars to pay someone to file your taxes is out of your budget, consider doing them yourself. There are many at-home programs that allow you to e-file with their user-friendly software.
Make under $69,000 annually? The IRS offers free federal tax filing with IRS-partnered sites with guided preparation. The IRS Free File Program is a public-private partnership with the IRS and various tax preparation and filing software companies.
Do we have to pay taxes on the stimulus check?
No, the economic impact payment (also known as stimulus check) is not considered taxable income. You can learn more about the economic impact payment on the IRS’ “Tax Tips” page.
Do I have to pay taxes on unemployment income?
Yes, federal unemployment compensation authorized under the Coronavirus Aid, Relief, and Economic Security (CARES) Act is taxable. You can have taxes taken out of your weekly unemployment check, but withholding is completely voluntary. Federal law allows any recipient the option of having a flat 10% withheld from their benefits to cover their tax liability.
If you opt-out, you should have a plan to pay quarterly or expect to pay once tax season comes around. State taxes vary state-by-state, and you can view the details about state tax brackets here.
Get more information about unemployment tax withholding here.
Invest your tax refund and build a future!
If you’re receiving a tax refund this year, use your money wisely. You can also consider investing in your future.
A fully managed investment account with MoneyLion has no minimums, no asset-based management fees, and allows you to invest any amount anytime.
Set up recurring deposits and watch your money grow on auto-pilot. Whatever your risk tolerance or thematic investing preferences might be, the choice is yours!
1 The Earned Income Tax Credit (EITC) is a benefit for working people with low to moderate income.
2 Additional Child Tax Credit (ACTC) is a refundable tax credit that people may receive if their Child Tax Credit is greater than the total amount of income taxes they owe.
3 Faster and easier access to funds is based on comparison of traditional banking policies and deposit of paper checks versus deposits made electronically and the additional methods available to access funds via a card as opposed to a paper check.