Tips for preparing to file your tax return in 2021

Jan 05, 2021

Expect COVID-19 processing delays

Many state and federal departments are still frantically trying to catch up after 5+ months of COVID-19 shutdowns. There could be delays in how long it takes the IRS to process your tax return this year. Here are some things to keep in mind:

  • The fastest way to receive a refund is still by combining direct deposit with electronic filing of your 2020 tax return.
  • Please do NOT rely on refunds by a certain date to pay your bills. We are finding some returns are requiring additional review time and processing is taking much longer. Refunds for 2020 tax returns with earned income tax credits or additional tax credits can’t be issued before mid-February 2021.
  • To check your refund status online, visit www.irs.gov and click “Get Your Refund Status” on the home page.
  • The IRS is still sending out assessment notices. If you receive one, please forward it to your tax preparer as soon as possible. Even if we can only wait, it is good to know what issues you might have.  
  • Although your tax preparer may want to assist by contacting the IRS, this process is taking on average 10 times longer than prior to COVID-19 and often “Please allow additional time” is the answer, although we are seeing some recent improvements.

For more information about IRS processing delays, go to www.irs.gov and type in “IRS operations during COVID-19” in the top right-hand search bar.  At the time of this writing, the IRS is no longer giving time frames to resolution of specific issues, and time frames recently given may NOT be accurate.

Consider new or additional ways to lower your tax bill

NEW CHARITABLE DEDUCTION ALLOWANCE – New this year, taxpayers not itemizing can take a charitable deduction of up to $300 for cash contributions made in 2020 to qualifying organizations.

RECOVERY REBATE CREDIT – Taxpayers may be able to claim the 2020 recovery rebate credit if they met the eligibility requirements and they did not receive full payment already in 2020. In addition, there is a new tax stimulus bill that passed Congress on December 21, 2020 that will impact 2020 as well as 2021.

REFUND INTEREST PAYMENT – The 2020 tax refunds for 2019 and prior federal income tax returns may have included Interest. Your tax preparer will need the 2020 Form 1099-INT for interest income received from the IRS.

STRATEGIES WITH DEADLINES IN 2021 FOR YOUR 2020 RETURN (restrictions apply)

  • Contribute to a traditional or Roth IRA

  • Consider an IRA for your spouse if your spouse did not work and you did.

  • Make a Roth IRA Contribution for your children.

  • Consider a Health Savings Account.

  • Set up a SEP, SIMPLE, 401(k) or other retirement plan if you are self-employed.

Please wait until you have most (or all) of your tax documents before submitting your information to your tax preparer. However, please do NOT delay getting organized and sending in your tax information once received.

If you have any questions, please call or email your tax preparer at SGA. We are always happy to help.

Contributing Author:

Amy M. DuPuis, CPA  |  Email

Amy has been with Sink, Gordon & Associates LLP since January of 2010 and works with business entities and individuals on taxation, research and consulting. Amy has a combined 20 years of accounting experience and is a member of the American Institute of Certified Public Accountants and the Kansas Society of Certified Public Accountants. She pursued a Bachelor of Science in Allied Health-Medical Dietetics at The Ohio State University and graduated in 1977. She gained her Master of Professional Accountancy from Wichita State University in December 1996. Amy gained her CPA designation in January 1997. Outside of the firm, she is involved with her church in Topeka, St. David’s Episcopal. Additionally, Amy volunteers for several organizations within the Topeka community by participating in Share Fest, Let’s Help and volunteering at Rescue Mission, among other organizations. Amy has three children.