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5 major points to remember when preparing to file your 2020 taxes

Posted at 8:28 AM, Jan 22, 2021
and last updated 2021-01-22 08:28:34-05

(WXYZ) — The April tax deadline may seem far off, but a tax expert says don't procrastinate, and said there are five key points to remember, so you don't waste your money.

Patty Hutson, the president and managing principal at Jenkins and Company Certified Public Accountants, outlined five key points to remember at tax time.

No. 1 – E-File Early

Hutson says the sooner you electronically file, the better. An IRS agent recently told her why.

“As of December 25, there are 6.9 million tax returns still to be looked at sitting at the IRS," she said.

The IRS was shut down for a long time due to the pandemic, so they're still backed up. Don't wait.

No. 2 – Note any unemployment received.

"A lot of the people, starting in March, they were receiving the maximum $366 a week plus the federal subsidy of $600 a week If they got that for 26 weeks, Alicia, it was $25,000," Hutson said.

And, yes, it is all taxable income. Hutson says you'll need a form 1099-G.

You can wait for it in the mail, or you can log in to your Michigan WAM account, go under the "I want to" tab for the link to print out the form.

No. 3 – Report economic stimulus payments

Make sure to report the stimulus payments. You'll need to know how much you received – if anything. Some people have even received two rounds.

No. 4 – Track your charitable contributions

Under the Federal CARES Act, taxpayers who don't itemize deductions may take a charitable deduction of up to $300 for cash donations made in 2020 to qualifying organizations.

No. 5 – Some tax credits can use 2019 income

Specifically, the Earned Income Tax Credits and the Child Tax Credits, because they are based on earned income. So if you received unemployment in 2020, you may want to as your preparer to look back to 2019 for your income or just check your tax files for it.

Bottom line, Hutson says she cannot stress the importance of e-filing as soon as you can.

She did say that if you're a victim of identity theft, that does require a paper filing, and some amendments do as well, so consult with a tax professional.