There are
things taxpayers can do before the end of the year to help them get ready for
the 2021 tax filing season. Below are a few of them.
Donate to
charity
There is
still time to make a 2020 donation. Taxpayers who don’t itemize
deductions may take a charitable deduction of up to $300 for cash contributions
made in 2020 to qualifying charities. Cash donations include those made by
check, credit card or debit card. Before making a donation, people can check
the Tax Exempt Organization Search tool on IRS.gov to make
sure the organization is eligible for tax-deductible donations.
The
Coronavirus Aid, Relief, and Economic Security Act changed this law. The CARES
Act also temporarily suspends limits on charitable contributions and
temporarily increases limits on contributions of food inventory.
Report
any name or address change
Taxpayers
who moved should notify the IRS of their new address. They should also
notify the Social Security Administration of any name change.
Renew
expiring ITINs
Certain
Individual Taxpayer Identification Numbers expire at the end of this year.
Taxpayers can visit the ITIN page on IRS.gov for more information on which numbers
need renewal.
Connect
with the IRS
Taxpayers
can use social media to get the latest tax and filing tips from the
IRS. The IRS shares information on things like tax changes, scam alerts,
initiatives, tax products and taxpayer services. These social media tools are
available in different languages, including English, Spanish and American Sign
Language.
Find
information about retirement plans
IRS.gov
has end-of-year find tax information about retirement plans. This includes resources for individuals
about retirement planning, contributions and withdrawals. The CARES Act retirement plan relief waived required minimum
distributions during 2020 for IRA or retirement plan accounts. Also, eligible
individuals can take a coronavirus-related distribution of up to $100,000 by
December 30, 2020 and repay it over three years or pay the tax due over three
years.
Contribute salary deferral
Taxpayers can make a salary deferral to a retirement plan. This helps maximize the tax credit available for eligible contributions. Taxpayers should make sure their total salary deferral contributions do not exceed the $19,500 limit for 2020.
Think about tax refunds
Taxpayers should be careful not to expect getting a refund by a certain date. This is especially true for those who plan to use their refund to make major purchases or pay bills. Just as each tax return is unique to the individual, so is each taxpayer’s refund. Taxpayers can take steps now to get ready to file their federal tax return in 2021.
(Sources: IRS Issue Number: COVID Tax Tip 2020-162 )