By Anna Phillips | February 11, 2021 at 7:11 PM EST – Updated February 11 at 11:49 PM
Many people may have experienced changes in employment, income, healthcare and other changes as the pandemic set in and carried on throughout 2020.
All such changes should be well documented and clear when you file your tax return to avoid an audit and potentially costly errors.
“The stimulus checks are not taxable, so that is literally free money,” said Mike Cunningham with Coastal Financial Planners. “It is not taxable income. Some people may not have received their stimulus check if they were supposed to, or if they thought they qualified, and there is a form that can be filled out as part of the tax return. And, they can get a tax credit in the tax return itself which would be the equivalent of receiving that stimulus check.”
Cunningham is a financial planner but does not do tax preparations.
He recommends everyone consult the guidance of a professional.
“One of the big surprises that I think a lot of people are going to experience this year is having to understand whether certain types of new incomes they received is taxable or non-taxable,” he said.
Filing early can benefit you in several ways:
1. Filing early means an early return (if applicable)
2. Filing early prevents last minute mistakes
3. Filing early helps minimize identity fraud
“You want to make sure you get that tax return right, so we do recommend that you do check with a tax preparer or your CPA, and give them the benefit of the doubt,” Cunningham said. “Don’t wait until the last minute. They have a lot to do and they want to get it right as well.”
While the start of tax season was pushed back by about two weeks, the deadline has not changed and is still April 15, 2021.
You can find other deadlines and tax information at IRS.gov.
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