Bring Clarity to Your Finances™

Clarity Financial Planning Services is an advocate for your financial future who takes a holistic approach to your needs and goals.

Do Your Research to Avoid Tax Season Tumult

Michelle Singletary of The Washington Post offered advice for what may be a tumultuous tax season for some people and a “supersize list of some of the issues people will face this year” in “Tax season 2021: A tornado is coming.” 

Really, you do not have to fear if you have already been working with a Fee-only financial planner. And there is still time to get help from a financial planning expert for this year and for the years to come. Here are some things to consider:

File electronically if you can: The general advice this year is to file your taxes electronically. Because of staffing issues and slowdowns with the IRS and the postal service, your return will be processed much more quickly if you file electronically.

Research claiming stimulus payments: If you were owed a stimulus payment and either did not receive one or did not receive the full payment you were owed, you can claim your stimulus payment on your taxes.  Singletary gives clear directions on an article entitles, “To claim your stimulus payment, look for Line 30 on your 1040 tax form.” 

Those who got the entire stimulus owed to them in the first and second rounds do NOT have to do anything.

Also, college students can claim stimulus payments in certain circumstances if they are supporting themselves financially. Those who have parents paying more than half of their expenses cannot claim a stimulus payment.

Be prepared to pay taxes on unemployment benefits: Some people may not have realized that unemployment benefits are subject to taxes. In the event that you calculate your taxes and realize you owe more than you can pay, you should still file your taxes on time.

Verify whether you can claim a home office deduction: Some people assumed that since once they started working from home due to the pandemic, they would be able to get a home-office deduction but this is not the case. Singletary writes, “You can take a home-office deduction only if you’re self-employed, an independent contractor or a gig worker.”