An Expert Shares the Insider Tax Tips We All Need Right Now

Kathy Pickering is the executive director of The Tax Institute at H&R Block. Below, Pickering shares her insider tips for getting the biggest tax refund possible, the common mistakes people make while filing and — unfortunately — why everyone should expect to get less money back from the IRS this year.

I have been with H&R Block for 20 years. I started my career in the information technology department and transitioned to the revenue-generating side of the business. For the last eight years, I’ve been leading The Tax Institute, the center of tax expertise for the company, providing the tax research, analysis and insights to help the company implement and operationalize the new tax laws and updates each year.

You pay income taxes in two places: your paycheck throughout the year and your refund or tax bill in April (May in 2021). Most people focus on the refund, but you don’t want to forget about your paycheck. It is really a personal decision if you want the most amount of money in your paycheck throughout the year, or if you want a big refund in one lump sum at the end of the year.

Getting a refund bigger than expected may sound like a nice problem to have, but it means you weren’t able to use your money during the year. It’s OK to want and plan for a big refund, but it’s always better to know it’s coming, so you can plan your finances with the full picture.

Please note that The IRS has announced that the federal income tax deadline for individuals is May 17, 2021 for the 2020 tax year. State deadlines have not changed, however, so make sure to confirm your state’s due date before you file. 

See: How To Avoid Paying Taxes Legally — and the 11 Craziest Ways People Have Done It

This year, we are seeing some people getting a surprise when they file taxes. The potential for surprises comes from updated IRS withholding tables that employers use to calculate tax withheld from an employee’s paycheck. These changes generally resulted in bigger paychecks and less tax withheld, starting in February or March of last year, even if you took no action. While most people will come out ahead overall, it won’t feel that way for the people who will get a smaller tax refund, or will end up owing because they got their tax reform benefit through bigger paychecks.

The second mistake we see is people missing the deadline. The deadline isn’t flexible and the IRS charges a failure to file penalty, so file on time. File something. If you can’t file a complete and accurate tax return by the deadline, file an extension. But remember, that is only an extension to file and not to pay, so any taxes due need to be paid by the deadline to avoid a penalty and interest.

Learn: Best and Worst States for Taxes — Ranked

The Tax Cuts and Jobs Act is the largest change to the tax code in 30 years, and impacts virtually everybody due to new tax brackets and tax rates. It’s going to take some work to untangle its impact, especially for families, homeowners and small-business owners or the self-employed. How tax reform impacts you depends entirely on your specific circumstances, so it’s important to look at your unique situation to see what you should expect when you file this year.

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This interview has been edited and condensed.