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TAX FACT: Expanded tax benefits help individuals and businesses give to charity during 2021; deductions up to $600 available for cash donations by non-itemizers WASHINGTON The Internal Revenue Service today explained how expanded tax benefits can help both individuals and businesses give to charity before the end of this year.... The Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted last December, provides several provisions to help individuals and businesses who give to charity. The new law generally extends through the end of 2021 four temporary tax changes originally enacted by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Here is a rundown of these changes. Deduction for individuals who don’t itemize; cash donations up to $600 qualify Ordinarily, individuals who elect to take the standard deduction cannot claim a deduction for their charitable contributions. The law now permits these individuals to claim a limited deduction on their 2021 federal income tax returns for cash contributions made to certain qualifying charitable organizations. Nearly nine in 10 taxpayers now take the standard deduction and could potentially qualify to claim a limited deduction for cash contributions. These individuals, including married individuals filing separate returns, can claim a deduction of up to $300 for cash contributions made to qualifying charities during 2021. The maximum deduction is increased to $600 for married individuals filing joint returns.

TAX FACT: Here’s what taxpayers need to know about paying taxes on their hobby activities Many people are engaged in hobby activities that are also a source of income. For example, some people started selling handmade items during the pandemic. These people must report this income on their tax return.... A hobby is any activity that a person pursues because they enjoy it and with no intention of making a profit. This differs from those that operate a business with the intention of making a profit. If a taxpayer receives income from an activity that is carried on with no intention of making a profit, they must report the income they receive on Schedule 1, Form 1040, line 8.

IRS extends additional tax deadlines to May 17 Following the extension of the filing and payment deadline for individuals to May 17, 2021, the IRS announced other tax deadline extensions to the same date. Here’s what’s affected:... Contributions to IRAs and health savings accounts People now automatically have until May 17, 2021, to make 2020 contributions to their: Individual retirement arrangements Health savings accounts Archer medical savings accounts Coverdell education savings accounts The deadline for reporting and paying the 10% additional tax on amounts included in gross income from 2020 distributions from IRAs or workplace-based retirement plans is now May 17, 2021. Lastly, the due date for Form 5498 series returns related to these accounts is now June 30, 2021

RS letters explain why some 2020 Recovery Rebate Credits are different than expected WASHINGTON As people across the country file their 2020 tax returns, some are claiming the 2020 Recovery Rebate Credit (RRC). The IRS is mailing letters to some taxpayers who claimed the 2020 credit and may be getting a different amount than they expected. It’s important to remember that the first and second Economic Impact Payments (EIP) were advance payments of the 2020 credit. Most elig...ible people already received the first and second payments and shouldn't or don’t need to include this information on their 2020 tax return. People who didn’t receive a first or second EIP or received less than the full amounts may be eligible for the 2020 RRC. They must file a 2020 tax return to claim the credit, even if they don’t usually file a tax return. When the IRS processes a 2020 tax return claiming the credit, the IRS determines the eligibility and amount of the taxpayer’s credit based on the 2020 tax return information and the amounts of any EIP previously issued. If a taxpayer is eligible, it will be reduced by the amount of any EIPs already issued to them. If there’s a mistake with the credit amount on Line 30 of the 1040 or 1040-SR, the IRS will calculate the correct amount, make the correction and continue processing the return. If a correction is needed, there may be a slight delay in processing the return and the IRS will send the taxpayer a letter or notice explaining any change.

IRS issuing third Economic Impact Payments to non-filers and most federal beneficiaries The IRS continues to issue the third Economic Impact Payment to eligible individuals. This includes Social Security recipients and other federal beneficiaries who do not normally file a tax return. Most of these payments will be sent electronically and received on April 7. Most of these payments will be sent electronically by direct deposits or to existing Direct Express cards they should arrive on the official payment date of April 7.

Nearly 7 million tax filers are in limbo and facing substantial delays in getting refunds so far this tax filing season, as the Internal Revenue Service struggles to keep up with the demands of issuing stimulus checks and implementing myriad tax code changes from coronavirus relief packages, including the one President Biden signed. There are 6.7 million returns that have not yet been processed, more than three times the number in the same period last year, when fewer than 2 ...Continue reading

Claiming the recovery rebate credit on a 2020 tax return will not delay processing of a tax return. However, it is important that taxpayers claim the correct amount. If a correction is needed, there may be a slight delay in processing the return. If corrections are made, the IRS will send the taxpayer notice explaining any changes. The recovery rebate credit will be included in the tax refund. The IRS will contact taxpayers by mail if more information is needed to process their tax return.

WASHINGTON The Treasury Department and Internal Revenue Service announced today that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. The IRS will be providing formal guidance in the coming days. This continues to be a tough time for many people, and the IRS wants to continue to do everything possible to help taxpayers navigate the unusual circumstances related to the pandemic,... while also working on important tax administration responsibilities, said IRS Commissioner Chuck Rettig. Even with the new deadline, we urge taxpayers to consider filing as soon as possible, especially those who are owed refunds. Filing electronically with direct deposit is the quickest way to get refunds, and it can help some taxpayers more quickly receive any remaining stimulus payments they may be entitled to. See more

Refund Delays You now have a month left to file your taxes with the Internal Revenue Service. But some people who filed early are reporting delays getting refunds.... For some, this is a repeat of 2020, when delays were also reported. Why? The IRS got a late start processing returns this year due to the January stimulus checks. Now, some say their refunds are three weeks late and counting.