10 Tips To Cover All The Angles

Before you file, read over these 10 tips to cover all the angles.
1. Filing an Extension

For the 2020 tax year, the IRS and Treasury Department have pushed the filing
deadline to May 17, 2021. Please note- the extension won't help all taxpayers. If
you are a taxpayer who must make estimated quarterly payments throughout the
year - this includes self-employed individuals, as well as those with small
businesses - estimated tax payments are still due April 15, 2021. 
You can file for an extension of time to file your tax return for any reason, but
there is no extension on the due date of any taxes you owe. If you think you will
end up owing taxes once you complete your return, make sure you pay what you
think you'll owe by the filing deadline, then you can reconcile it once the return is
complete. If you do not pay the tax you owe on the due date or you pay too little,
you will pay interest on the underpayment and may have to pay a penalty.
Remember that due dates for state income tax returns vary so check your state's
deadline.
2. Document Charitable Contributions Scrupulously
Charitable contributions are getting more scrutiny from the Internal Revenue
Service (IRS), so if you claim them as itemized deductions be sure you have
written acknowledgment from the charitable organizations for contributions of
$250 or more. The letter must include the name of the organization, description
of the property or cash contributed, the value of any goods or services received
in exchange for the contribution or the statement “no goods or services were
received” and the date of the contribution. Contributions can only be claimed if
they are made to qualified organizations. Use the IRS Exempt Organizations
Select Check website to confirm that an organization is qualified. If the
organization isn’t listed, you can contact the organization and ask for its most
recent 501(c)(3) determination letter. If your contribution is for less than $250 be
sure to keep a precise record to support your donation, such as a photo or list of
what you gave, when and to whom (for example, if you drop clothing off in a bin).
3. New Due Dates for Some Returns
Some information forms that taxpayers need in order to file their tax returns may
have different due dates than your individual tax return. Visit the IRS's website for
more information. 
4. When You Need to Amend (& When You Don't)
Receiving updated Forms 1099, Schedules K-1 and other information forms after
you've already filed, are a major reason that taxpayers file amended tax returns.
Know that if you find yourself in a situation where you receive corrected
information returns after filing, you do not have to amend your return if the
difference is no more than $100 in income or no more than $25 in withholding or
backup withholding. Information returns with these "de minimis" errors will be
considered as having been filed with the correct information and the IRS won't
penalize you.
5. Don’t Overlook Disaster Losses

If you suffered a loss in a federally declared disaster area, the loss can generally
be taken as an itemized deduction on your tax return, although you can no longer
deduct just any loss due to theft or disaster – it must have been the result of a
federally declared disaster. The loss must relate to your home, household items
or vehicles and the amount you can deduct is reduced by any salvage value of
your property and any insurance payment you received. Usually these losses are
deducted on Schedule A of Form 1040 for the year in which they occurred
although they may be taken in the year before the disaster if applicable. And, if
your casualty loss is greater than your income, check to see if you qualify for a
net operating loss. You don’t have to be a business to qualify for a net operating
loss under these circumstances.
6. ID Theft Still a Big Risk
Tax season is bonus time for identity thieves. Vigilantly protect your personal and
financial information. Never send your tax return information to a tax preparer
electronically unless it’s encrypted or is being submitted to the preparer through a
secure portal. Shred draft copies of your tax return. Be wary of phishing scams
that may take the form of a phone call, email, text or post on your social media
account from an institution you’d normally trust. The IRS’s first contact with a
taxpayer is always with a mailed letter, so if you get a call from someone claiming
to be the IRS out of the blue, it's a scam – hang up and don't give any personal
information.
7. Private Debt Collectors on the Job
One relatively new change is that the IRS does now use private debt collectors
for certain overdue federal tax bills. If your tax debt is turned over to the debt
collection agencies, you will receive a letter from the IRS, and the debt collection
agency will send another letter confirming that it is responsible for collecting the
debt. The collection agencies are allowed to identify themselves as IRS
contractors and must follow the rules under the Fair Debt Collection Practices
Act. Any checks should be paid to the U.S. Treasury, not the private debt
collection agency. If you have an outstanding federal tax bill, consider contacting
the IRS to apply for an online payment agreement, to make an offer in
compromise or to request a temporary delay in collection. It’s often wise to
consult a tax professional who has experience with these programs if you’re in
this situation.
8. Your ITINs May Have Expired
Taxpayers who use an Individual Taxpayer Identification Number (ITIN) may
need a new one. ITINs expire if not used on a federal tax return at least once
every three years and all ITINs issued prior to 2013 will have to be renewed on a
rolling renewal schedule. For 2020 (for 2021 filing year), ITINs with the middle
digits 90, 91, 92, 94, 95, 96, 97, 98 or 99 will automatically expire if not renewed,
so if you’re in this situation, submit your application for renewal (Form W-7) and
the required documentation ASAP. Filing your tax return without a renewed ITIN

or without the renewal application will result in an adjustment to your return as
filed. The return will be processed, but no refunds will be issued and any
exemptions or credits claimed on the return will be denied. If tax is owed as a
result of these adjustments, interest and penalties may be due. Read more about
expiring ITINs on the IRS website here. 
9. Get Your Answers From the IRS
The IRS offers an Interactive Tax Assistant that can provide you with many tax
law questions to help ensure you are filing and paying correctly. This website has
a list of the topics covered as well as a link to the tool.
10. Choose Your Tax Preparer Wisely
If you decide to hire a CPA or other tax professional to prepare your taxes, get
referrals, verify their credentials, check to see if they have any consumer
complaints filed against them, interview them, and ask them how they bill and
inquire about how they secure their clients’ financial information. Make sure they
have an IRS Preparer Tax Identification Number (PTIN). It’s required by law. If
they don’t have one, walk away. Other red flags when looking to hire a tax
preparer include not asking to see your prior year’s return, refusing to tell you
how they bill, suggesting a tax credit or deduction that makes you uncomfortable,
asking you to sign an incomplete or blank return or wanting your refund to be
deposited into their bank account instead of yours.