tax filing

Top 10 Quick Tips for Your 2020 Taxes

From new deadlines to strategies to make sure you get all the stimulus money you have coming to you, here are some quick tips to keep in mind about your 2020 taxes.

Are dollars, documents and deductions on your mind this month? Even if you trust your tax preparation to a professional, here are some tips that are particularly relevant given the changes that have taken place over the past year. Perhaps some of them are pertinent to you.

  1. You get an extra month:  May 17, 2021, is the new deadline to file your 2020 federal income taxes. "This continues to be a tough time for many people, and the IRS wants to continue to do everything possible to help taxpayers navigate the unusual circumstances related to the pandemic," said IRS Commissioner Chuck Rettig in a news release. "Even with the new deadline, we urge taxpayers to consider filing as soon as possible, especially those who are owed refunds. Filing electronically with direct deposit is the quickest way to get refunds."
  2. But the deadline for your 2020 state income tax filing may not be the same as the 2020 federal income tax filing deadlines. Check with your state on your exact deadline. For example, Hawaii has a deadline of April 20. 
  3. May 17 is also the new deadline to make 2020 contributions to Roth IRAs, traditional IRAs and health savings accounts (HSAs).
  4. April 15 continues to be the deadline for making 2021 estimated tax payments for the first quarter of the year.
  5. If your 2020 income is much lower than 2019 or you've had a child, consider filing your federal income taxes sooner rather than later. Stimulus payments and tax benefits related to the American Rescue Plan (ARP) are based on your most recent return. So, if your 2020 situation is (much) different from 2019, you may be eligible for new benefits.
  6. If your 2020 income is much higher than 2019 you may want to wait to file your federal taxes until you have your stimulus payment in hand.
  7. If your 2020 Adjusted Gross Income (AGI) is less than $150,000 and you received unemployment compensation last year, the first $10,200 of your benefit is not taxable on the federal level.
  8. Even if you take the standard deduction, the 2020 CARES Act allows you to take an above-the-line deduction of $300 for a cash donation to a public charity.
  9. When collecting details for your income tax return, remember any income you made on the side. While not all money you receive (like gifts of $15,000 or less) is taxable, some often-overlooked side income that does need to be reported includes canceled debt and cash from side gigs.
  10. Remember the critical "DCDs": Dependents, Credits and Deductions! The IRS defines dependents as "qualifying child" or "qualifying relative." For help determining who qualifies as a dependent, the IRS has an interactive questionnaire. Depending on the type of support you provide these individuals, different credits and deductions may be relevant, especially following the passage of the ARP.

About the Author

Caroline Wetzel, CFP®, CDFA®, AWMA®

Vice President, Private Wealth Adviser, Procyon Partners

Caroline Wetzel  CFP®, CDFA®, AWMA®, is a vice president and private wealth adviser at Procyon Private Wealth Partners.  She has worked in financial services since 2001 and began specializing in wealth management for affluent multi-generational families in 2015.  Caroline earned a B.S. degree in policy analysis and management at Cornell University and an MBA in finance and advanced certification in marketing from the University of Connecticut School of Business.

Most Popular

The 15 Best Stocks for the Rest of 2022
stocks to buy

The 15 Best Stocks for the Rest of 2022

The lesson of the past two years: Be ready for anything. Our 15 best stocks to buy for the rest of 2022 reflect several possible outcomes for the seco…
June 21, 2022
Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
Retirement Comfort: How to Avoid Running Out of Money
retirement planning

Retirement Comfort: How to Avoid Running Out of Money

When it comes to retirement planning, one thing all of us worry about is whether we will have enough money to last. Financial professionals can help y…
June 25, 2022

Recommended

Yours, Mine and Ours: A Checklist for Blended Family Finances
personal finance

Yours, Mine and Ours: A Checklist for Blended Family Finances

When combining finances as a new family, there’s lots to consider. To make the best choices, here are six key areas to plan ahead and consider.
June 27, 2022
An Easy Way to Find How Much You Will Spend in Retirement
retirement planning

An Easy Way to Find How Much You Will Spend in Retirement

One simple math equation can help you determine where to start building your retirement income plan, and whether your money should last.
June 27, 2022
8 Money Tips for Seniors Suffering from Inflation
Inflation

8 Money Tips for Seniors Suffering from Inflation

This year has been an especially tough one for seniors on fixed incomes. To stay on track, try these eight financial survival tips.
June 26, 2022
What to Do When Your Tenant is a Hoarder!
real estate investing

What to Do When Your Tenant is a Hoarder!

Landlords must be very careful how they approach this tricky situation. Handled incorrectly, you could be in for a lawsuit.
June 26, 2022