American Family Tax Services Inc.

IRS Projects Delivery Schedule for 2020 Tax Refunds & Tracking With the processing of 2020 federal tax returns now underway, the IRS has issued information about the likely timetable for refunds to be issued. Here are some key points to keep in mind: - The IRS began processing returns on February 12, 2021.... - The fastest way to receive your refund is to have your return filed electronically and request the refund by direct deposit to your bank account. - The IRS expects about 90% of taxpayers who file electronically with direct deposit to receive their refunds within 21 days, provided there are no problems with their returns. - Many taxpayers who file promptly and qualify for the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) will receive their refunds in early March. - Those who file paper returns and/or request their refunds by check may experience longer wait times for their refunds. - Refunds will also be delayed if the IRS must request additional information from taxpayers due to issues with their returns. Typically, as soon as 24 hours after your federal return is e-filed, you may track the status of your refund by using the IRS Where's My Refund portal, at http://irs.gov/refunds. In many cases, the portal can provide a personalized refund delivery date.

IRS Expands Allowed Items for 2020 Educator Expense Deduction Did You Know? Qualifying educators may claim a tax deduction of up to $250 for unreimbursed classroom expenses, even if they do not itemize deductions. If both members of a couple filing jointly work as educators, they may each deduct up to $250, for a maximum possible deduction of $500. Ordinarily, allowed expenses are limited to standard classroom supplies such as paper, writing utensils, computers, rulers and... art supplies. For 2020, however, eligible educators may also include in their deduction certain expenses incurred due to the COVID-19 pandemic. Examples include the cost of personal protective equipment, sanitizer and cleaning agents purchased after March 12, 2020 to prevent the spread of coronavirus. Note, however, that the per-educator deduction limit remains at $250. Eligible educators generally include K-12 teachers, counselors, principals and aides who worked for at least 900 hours at an elementary and/or secondary school in 2020. The allowed deduction may be reduced for a variety of reasons, including taking tax-free withdrawals from a Coverdell education savings account. A tax professional can help you determine whether you qualify for the Educator Expense Deduction, and the allowed amount of your deduction if so.

How to Set Yourself Up for a Hassle-Free Tax Season (4/4) By taking a few simple steps now, you can greatly reduce uncertainty and stress during the 2020 tax filing season. These actions will help set you up to complete your return efficiently, without unpleasant surprises: Start Early!... The IRS opens for tax filing season tomorrow, February 12th. With all the unpredictability of life during a pandemic, staying ahead of the tax game is more important than ever. Assemble your records as soon as possible. If you have any questions, a tax advisor can help you identify and organize the documents you need. Tax professionals will have far greater availability early in the tax season than at the last minute.

How to Set Yourself Up for a Hassle-Free Tax Season (3/4) By taking a few simple steps now, you can greatly reduce uncertainty and stress during the 2020 tax filing season. These actions will help set you up to complete your return efficiently, without unpleasant surprises: Be Aware of Refund Interest And Stimulus Payments... Because the processing of some tax refunds was delayed in 2020 due to the pandemic, the IRS paid interest to many refund recipients. Unlike refunds themselves, these interest payments are classified as taxable income. If you received a tax refund interest payment, the IRS will send you Form 1099-INT in January, which you will need when preparing your return. Recipients of a 2020 Economic Income Payment (EIP, also called a stimulus payment) should have also received IRS Notice 1444, Your Economic Impact Payment. Make sure to keep this notice handy. If your EIP amount was lower than it should have been, Notice 1444 will give you the information you need to claim a tax refund for the balance owed to you.

2020 Charitable Contributions Deduction Did You Know? Ordinarily, only taxpayers who itemize deductions may deduct charitable contributions on their federal tax returns. However, the CARES Act allows many people who do not itemize to claim a deduction for 2020 cash contributions to IRS-approved charities. Tax deductions lower a person's tax bill by reducing taxable income. In general, individuals and couples who do not itemize deductions may deduct up to $300 for cash contr...ibutions made to qualifying charitable organizations in 2020. Qualifying organizations include many nonprofits dedicated to educational, religious, literary, and disaster and hunger relief activities. The IRS provides an online search tool (link below) to help taxpayers determine whether a particular charity qualifies to receive tax-deductible donations. As a reminder for those who do itemize deductions, the CARES Act also sets the 2020 cash contributions itemized deduction limit at 100% of adjusted gross income (AGI) for most taxpayers, a temporary increase from the usual limit of 60% of AGI. Qualifying 2020 cash contributions in excess of the limit may be carried over as deductions for tax year 2021. A tax professional can help you determine whether your contributions qualify for these special rules, and how to claim your deduction if so. IRS Charitable Organizations Search Tool: https://www.irs.gov/charitie/tax-exempt-organization-search

Giving Tuesday and Charitable Donations - Did You Know? Giving Tuesday is an annual event that highlights charitable giving after Thanksgiving. If you are considering charitable donations, you may be able to donate to a Donor-Advised Fund (DAF) every two or three years instead of every year. This may qualify you to receive tax benefits now, allow the amount to grow tax-free, and the decision on which qualified charity to fund can be made later.... If you are 70.5 years or older, you may also be able to make a qualified charitable distribution (QCD) directly from your IRA this year. QCDs may allow the donation to be deducted from your income. A tax advisor can help you structure your charitable giving. The IRS has released a tool to make it easier to get information about qualified charitable organizations. The Exempt Organizations Select Check tool can be found at: https://www.irs.gov/charitie/tax-exempt-organization-search.

We just celebrated Thanksgiving a few short days ago in the spirit of the holiday, what are you most grateful for? We are grateful for YOU our amazing clien...ts & supporters of Toys for Tots!! Because of your dedication and selfless generosity, we are able to provide toys, books, and educational gifts to the Toys for Tots program so they can help millions of less fortunate children each year. So, thank you - so very much - for all you give. Please know that it brings tremendous joy, laughter, and happiness to the children living in poverty in our Nation. #Grateful #GratefulHeart #Gratitude #Thankful ALL THREE AMERICAN FAMILY TAX SERVICES LOCATIONS ARE OFFICIAL DROP OFF SITES FOR TOYS FOR TOTS !!!!!

Paying Estimated Tax to Avoid Penalties Did You Know? With more and more people deriving income from a variety of sources, including side jobs, self-employment and gig economy work, the IRS has reported a substantial increase in the number of Americans who underpay federal income tax during the year. Underpayment can lead to an unpleasant spring tax surprise, including substantial penalties and interest charges. If a significant portion of your income is not subject to pa...ycheck withholding, you may need to make quarterly estimated tax payments to avoid incurring an Estimated Tax Penalty for 2020. Common income types that may necessitate making estimated tax payments include: - Business income, which includes rental income, as well as income from self-employment and gig economy work (working for a rideshare service, mowing lawns, etc.) - Royalties and grants, including grants in support of artistic or educational endeavors - Interest, dividend and alimony payments - Unemployment Insurance (UI) and Social Security benefits It is critical for those who have received UI benefits in 2020 to learn whether they must make estimated tax payments before the year ends. Many state unemployment agencies have not withheld taxes from the federal $600-per-week federal UI benefit that was paid under the CARES Act from late March through July, or from the temporary $300 weekly federal UI payment recently implemented by Executive Order. Therefore, even those who had tax withheld from their UI benefits may not have paid enough in federal taxes to avoid penalties. The IRS encourages Americans who have received any form of non-employee income in 2020 to do a midyear tax checkup, and begin making estimated tax payments immediately if necessary. The third-quarter estimated tax payment deadline was September 15, 2020, but those who missed the deadline can minimize penalties by making a payment as soon as possible. Fourth-quarter estimated tax payments are due January 15, 2021, although taxpayers may generally skip the fourth-quarter payment if they file a 2020 return and pay all tax due by February 1, 2021. In most cases, taxpayers will avoid 2020 tax penalties if their paycheck withholding and/or estimated tax payments for the year add up to at least 90% of their 2020 tax, or 100% of their 2019 tax, whichever is lower. A tax professional can help you determine whether you need to make estimated tax payments this year, along with when and how much to pay. IRS online payment portal: https://www.irs.gov/payments

Renewing ITINs - Did You Know? Individual Taxpayer Identification Numbers are used for taxpayers who are required for U.S. tax purposes to have a U.S. taxpayer identification number but do not qualify to get a social security number. If you use an ITIN, you should check if it expires this year. If it does, information about how to renew your ITIN can be found at: https://www.irs.gov/credits-deduct//how-do-i-renew-my-itin. Keeping your ITIN current helps avoid tax refund and... processing delays. Taxpayers who have not used their ITIN to file a federal return at least once in the last three years will see their number expire Dec. 31, 2020. ITINs with middle digits 90, 91, 92, 94, 95, 96, 97, 98 or 99, that were assigned before 2013 and have not already been renewed, will also expire at the end of the year.