The Answers to Top Questions During Tax Season

Paying taxes is a tall enough order during the best of years, and 2020 was hardly the best of years. In terms of taxes, it was a year like no other. The government was forced to borrow record amounts of money to distribute to taxpayers in the form of emergency cash payments. That cash, however, was not counted as part of those taxpayers’ taxable income from 2020. 

Find Out: What Are the 2020-2021 Federal Tax Brackets and Tax Rates?

The IRS also did something that was almost unprecedented during the year — it postponed Tax Day, pushing the filing deadline back from April 15 to July 15, 2020.

Needless to say, if you’ve got tax questions, you are not alone. The following is a summary of some of the most common tax questions complete with the most up-to-date and accurate answers and information. Tax Day will be here before you know it, and while you don’t have to pay just yet, it’s never too early to find answers to your most pressing tax questions. 

Last updated: Jan. 15, 2021

How Do I Know If I Have To File a Tax Return?

Factors like your age, income and filing status all determine whether or not you have to file an income tax return. For example, if you’re under the age of 65, you’re single, you earned less than the standard deduction ($12,400 in 2020) and you don’t have self-employment income or some other special circumstance, you don’t have to file a return.

The IRS offers a simple questionnaire called “Do I Need to File a Tax Return?” Anyone can complete it in about 12 minutes.

Read More: 8 New or Improved Tax Credits and Breaks for Your 2020 Return

What Filing Status Should I Choose?

Your filing status determines your tax liability. Everyone falls into one of five filing status categories and each comes with its own tax bracket. There are two options for married people and three for unmarried people, including:

• Single
• Married filing jointly
• Married filing separately 
• Head of household 
• Qualifying widow(er) 

If you’re not sure which to choose, use the IRS’ free tool “What is My Filing Status?” It takes about five minutes to complete.

Find Out: Top 10 Most Expensive States To File Taxes

Do I Have Any Dependents?

The IRS classifies dependents either as “qualifying children” or “qualifying relatives.” That can include biological children, foster children, stepchildren and any of their descendants. Other relatives can qualify as dependents, even if they don’t live in the household in some cases. 

The IRS’ “Who May I Claim as a Dependent?” tool will help you figure it out if you’re not sure.

See: The Major Tax Changes for 2021 You Need To Know About

How Do I Know My Tax Bracket and Tax Rate?

The IRS releases updated tax brackets and tax rates every year. For tax year 2020, to be filed in 2021, the brackets and rates are:

• 12% for incomes over $9,875 ($19,750 for married couples filing jointly)
• 22% for incomes over $40,125 ($80,250 for married couples filing jointly)
• 24% for incomes over $85,525 ($171,050 for married couples filing jointly)
• 32% for incomes over $163,300 ($326,600 for married couples filing jointly)
• 35% for incomes over $207,350 ($414,700 for married couples filing jointly)
• 37% for incomes over $518,400 ($622,050 for married couples filing jointly)

Read More: Tax Year Deadline Dates You Need To Know

Should I Take the Standard Deduction or Itemize?

In 2020, the standard deduction is $12,400 for single filers or $24,800 for married couples filing jointly. With no limitations on itemized deductions, you can literally write off every expense that can legally be deducted from your taxable income. If you have enough of those expenses to add up to more than $12,400 or $24,800, you should itemize. If not, take the standard deduction.

Did You Know: This Is Where Your Tax Dollars Actually Go

What’s the Difference Between a Tax Credit and a Tax Deduction?

Tax credits, which can be either refundable or nonrefundable, are applied to the amount of tax you owe to lower your bill or increase your refund. Tax deductions, on the other hand, are items that reduce the amount of your income that can be taxed.

New Homeowners: Here’s What You Need To Know for Your Taxes

When Are Taxes Due?

All tax returns for tax year 2020 must be filed by April 15, 2021, which is also the deadline for all payments owed to the IRS unless an extension has been granted. It’s important to note that in 2020, the IRS extended the filing deadline by three months to July 15 to help with the impact of the pandemic. No such extension has been granted for this year.

Find Out: What Does Biden’s Win Mean for Your Taxes?

How Do I File a Tax Return?

You can file a federal tax return at no cost directly through the IRS’ Free File system. You can also use the IRS Tax Counseling for the Elderly (TCE) and Volunteer Income Tax Assistance (VITA) programs to get help filing for free if you qualify. There are also many commercial software options, including big names like TurboTax, TaxSlayer and Credit Karma. Many offer both free and paid versions of their services. Finally, there’s always the option of hiring a professional who is an authorized e-file provider.

Read: 9 Tax Tips Every Married Couple Must Know

When Will I Get My Refund?

The IRS generally starts accepting returns and processing refunds in late January. Nine out of 10 refunds arrive within 21 days, with one big caveat. About 80% of all filers receive refunds through direct deposit. Those who still rely on the mail should expect significant delays, particularly now with COVID-19 affecting mail and shipping times. The IRS urges everyone to sign up for direct deposit, and if 21 days pass with no refund, use the IRS’ “Where’s my Refund?” tool.

Find Out: Get These 12 Tax Moves Done To Increase Your Tax Refund

What If I Can’t Afford To Pay the Tax I Owe?

Always file a tax return by April 15 whether you can afford to pay your tax bill or not. When you do file, pay whatever you can to reduce your bill. Rest assured, the IRS will contact you about the rest. When they do, you’ll be able to work out a payment plan in most cases, and that can help you stretch your bill out into agreed-upon monthly installments.

More From GOBankingRates

• These Are the Best Banks of 2021 – Did Yours Make the Cut?
• 36 Ways To Save For Your Emergency Fund and Any Unexpected Situations
• Top 100 Banks Leading the U.S. in 2021
• 35 Ways To Slash Your Car Costs

About the Author

Andrew Lisa

Andrew Lisa has been writing professionally since 2001. An award-winning writer, Andrew was formerly one of the youngest nationally distributed columnists for the largest newspaper syndicate in the country, the Gannett News Service. He worked as the business section editor for amNewYork, the most widely distributed newspaper in Manhattan, and worked as a copy editor for TheStreet.com, a financial publication in the heart of Wall Street’s investment community in New York City.

Read More