The year 2020 has brought lots of changes in the economy. Are you worried about paying the 2021 property taxes? Then you must plan on this Q4 for your tax appeal. The IRS form 1040 has made a few changes this year. Every year the tax codes may be changed so that line numbers can increase or decrease in forms.
Are you a first-time taxpayer? Then you might be wondering what IRS Form 1040 is. It is one of the documents that is widely used in the United States by taxpayers to file their annual tax returns. Any resident of the United States can file their taxes with the help of this 1040 form. The non-resident of the US can file their taxable income under 1040NR or 1040NR-EZ.
is two pages long with a total of 23 lines. The first page will collect the complete details of the taxpayer and his/her dependents. The second page will collect income reports, deductions, credits, and much more. Form 1040 can be filed either in paper or electronic filing. 92% of the people file their taxes electronically.
Changes in the tax filing 2021
- Virtual currency
- Charity contributions can help
- Flexible retirement plan
The department of treasury has started to trace the virtual currencies for the upcoming year. The first question in the form may include details of sell, receive, or exchange financial interest during 2020. The government has given instructions to report such cryptocurrency transactions every year. If you haven’t reported it, you may receive a penalty or even a prison sentence of 5 years.
Charity contributions can help
The year 2020 has been so unstable due to covid-19 and other natural disasters. If you have done any charitable contributions, then there are chances for reducing your taxes in Adjusted Gross Income (AGI) by providing proper documentation of the contribution. A big bonus for many taxpayers is that they are eligible for a $300 reduction due to the coronavirus relief bill. Keep your receipts and letters of acknowledgments handy for verification.
Flexible retirement plan
The coronavirus relief bill has benefited the retired taxpayers. The bill suggests that the taxpayer may not have been contracted by the virus but went under quarantine or other situations which made them not eligible for earning money to handle their economy. If the taxpayer is below 59 ½ years then 10% of the total penalty will be distributed for the next 3 years. The taxpayer can take the next 3 years to repay the total amount.
These are some of the major changes which may happen in the form 1040 for the year 2021. There may be slight changes in the IRS forms because of new tax policies adopted by the newly elected government. To stay updated with recent tax tips, O’Connor can help you out!