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IRS tax season 2021 starts Friday: From stimulus checks to unemployment benefits, here’s what you need to know.

IRS tax season 2021 starts Friday: From stimulus checks to unemployment benefits, here's what you need to know.


IRS tax season 2021 starts Friday: From stimulus checks to unemployment benefits, here’s what you need to know.

Jessica Menton
How tax brackets affect what you pay in income taxesWhy being taxed, say 22% of your income, is a lot more complicated than you may assume. Here’s a breakdown of what you actually pay in income taxes.Just the FAQs, USA TODAYTax season 2021 is finally here. This time it’s a little different for many Americans due to COVID-19, especially for taxpayers who lost jobs or hours during the pandemic last year. The tax impact of everything from stimulus checks to unemployment benefits could leave you with questions when filing returns, creating new headaches for many.  The Internal Revenue Service will begin accepting and processing 2020 tax returns on Friday, February 12, more than two weeks later than last year. That’s because the tax agency needed more to program its systems to reflect new tax rules.(If you have any tax questions, please feel free to fill out this form. USA TODAY will be answering the top reader questions as we go through tax season.)As you get started putting together your returns, here are a few key things to keep in mind:Will I owe taxes on stimulus checks?No, stimulus checks aren’t considered income by the IRS. They are prepaid tax credits for your 2020 tax return, authorized by two relief bills passed last year that aimed at stabilizing the struggling U.S. economy in the wake of the pandemic.Did you collect unemployment compensation in 2020? The tax season shocker for many jobless people will be that their tax refund could be far smaller than expected, or they might even owe taxes. Taxes aren’t withheld automatically from jobless benefits. If you are jobless in 2021, and receiving unemployment compensation, you may want to take action to have federal taxes withheld in the future. Why is the start date later this year?Does this feel a little late to you? That’s because the IRS usually begins accepting returns in late January.The changes aim to ensure that eligible people will receive any remaining stimulus money as a Recovery Rebate Credit when they file their 2020 returns, the agency said. The good news is that the 2020 tax filing season will allow people who missed out on a check or received too little to claim their full stimulus payments, which the IRS will send later this year via their tax refunds.Of course, some things never change. Here are some standard tips to keep in mind: Set up direct deposit for tax filingTo speed up refunds during the pandemic, the IRS urges taxpayers to file electronically with direct deposit. Free File Alliance, an IRS program that partners with private companies to provide free tax preparation to millions of filers, is now available to those whose adjusted gross income was $72,000 or less in 2020.Beware of tax scamsBe wary of unscrupulous individuals who may offer to prepare your taxes but could steal important personal information from you.As part of a hot scheme in 2021, identity thieves are targeting tax professionals by sending an email that appears to be from the IRS. The phony email refers to “IRS Tax E-Filing” and verifying key e-file information.Name change or wrong addressDid you change your name or move to a new address? If you legally changed your name with the Social Security Administration, make sure it is reflected in your federal and state tax returns. A mismatch may delay the processing of your returns. Any correspondence and even your tax refund may get mailed to the wrong address.Incorrect bank account numbersBe sure to double-check the routing and account numbers on your return. Taxpayers who are anticipating a refund should choose direct deposit, which is typically the fastest way to get your money.Contributing: Susan Tompor, Detroit Free Press

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