FORT WAYNE, IND. (WANE) – Tax season kicks off at the end of this year, and in addition to stimulus reviews and the continued spread of COVID-19, there are a number of changes in tax laws.
"A lot of people will not be happy," said Keith Layman, managing partner of Apple Tree Financial Group. "I know a lot of customers are saving (refunds) with it. Then it's their savings, vacation pay, home remodeling allowance, whatever. So there will be some unhappy people who will have time to submit."
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One of the biggest changes this year will be the way taxes are prepared. Rather than scheduling an appointment with a CPA or tax professional in person, several agencies are asking customers to email their materials, leave them in their mailbox, and then video-conference.
Fortunately, even if the IRS doesn't start accepting returns until February 12, you can prepare your taxes early. The brought forward start date is due to the fact that the IRS must program and test the IRS systems following the changes to the tax law. The last day of submission has to be postponed from April 15th. However, this could change due to the pandemic.
Laie said the best way to file taxes is electronically. So the IRS demands taxes.
"They really don't want paper or paper returns anymore," Layman said. "The second is that it's easy to track so it's less likely to get lost in the mail. It's not that you can't get a refund, it's just that it's much easier and quicker for taxes."
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Many who have not yet received their stimulus check may have posted their tax returns. So far, a majority of Americans have received two stimulus checks.
By the time the first round of stimulus checks expired, recipients should have received letters from the government about how much they were given. Accountants need to know how much has been received. If you haven't received enough, you will get the difference back as a refund.
“If you earned a little less in 2020, you can qualify for more. Or, you had a child in 2020 to qualify for more. So these are things that will be different, ”Layman said.
But do we have to pay the money back?
When the stimulus checks were first done, officials said people didn't have to repay them. The IRS is still saying that, but Layman said it is possible that will change.
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“That was one of our questions as a preparer. What if I normally owe $ 2,000? Do I now owe $ 3,200? And (the IRS) claims no, but we'll see it again as soon as we start filing, ”Layman said. "After doing this for several years, I know that what they say can be very different from what the IRS operates."
Laypeople said that people who may have to repay the stimulus checks will be widows or widowers as of now.
If your spouse passed away before COVID in early 2020, and then you received a stimulus check for you and your deceased spouse, the IRS says you will have to repay the part that went to your spouse because they weren't with you as COVID met.
Additionally, newly elected President Joe Biden has a proposal for first-time buyers that will give them up to $ 15,000 to apply for a down payment. The tax credit is based on a homebuyer tax break introduced by then President George W. Bush in 2008 during the Great Recession. However, Bush's was a $ 8,000 loan that you will pay back on your tax return over a 10 year period.
Biden's tax credit is a cash refund that a buyer can receive immediately. If you want to buy a home in February, you can receive the money and use it for a down payment instead of waiting for the 2022 tax credit.
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"Better to get it ahead of time if you really plan to put it at home," Layman said. “You could have $ 15,000 that could help you with (personal mortgage insurance). It would definitely be better in my thinking process to get it ahead of time in order to have more equity in your brand new home. "
Biden has also suggested several tax credits that he believes will help boost the economy. One of those plans is a 401K where the government gives everyone a tax credit instead of giving you a deductible.
Let's say you put $ 1,000 into your 401K. Instead of taking a deductible, you would receive a tax credit. Laie said the details are still in the works.
Another plan is to avoid increasing the cost base. This means that a beneficiary who inherits assets that have grown significantly over the lifetime of the deceased is likely to pay much higher taxes if the asset is later sold.
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"This is one of the biggest drawbacks for any taxpayer," Layman said. “But some of the others are good. The homebuyer credit, I mean wow! And right now, if it doesn't change how they define a homebuyer, this isn't just the first home you've ever brought with you. If you haven't bought a home in the past five years, you're a first-time buyer. "
Laypeople advise them to file taxes, be patient, get them done early, and have a tax professional deal with them.
"You may have to be patient," Layman said. “COVID really threw the IRS for a kind of loop last year. The IRS was closed like everyone else. So there are people who were upset that their stimulus checks came seven months later, and there are still people who haven't received their first round of stimulus checks. "
He added, "This is all handled by the Treasury Department, the IRS. So if we get another stimulus check in February or March, it will start to overwhelm the IRS, which is also filing tax returns."