2020 made us all look long and hard at the current state of our business industries and our personal finances. And with that came new laws and tax breaks that you may be eligible for. Charitable Contribution Tax Breaks The Taxpayer Certainty and Disaster Relief Act of 2020 allows you to take up to $300 in charitable contributions as a tax deduction for the tax years 2020 and 2021, without itemizing. This change was made to help charities that were struggling during the pandemic, which means your charitable giving benefits you while also helping spur more momentum for philanthropy in these difficult times. It’s also worth noting that if you are able to itemize your charitable giving, the CARES Act allows you to deduct 100% of your adjusted Gross Income (AGI) in 2021, rather than the standard 60% deduction rate. Credit for Health Insurance Costs If your medical expenses exceed 7.5% of your AGI, and you itemize your deductions, you can deduct them. This percentage was set to go up in 2021 to 10%, but the passing of the latest act made this lower rate permanent. Medical expenses could include things like medical office fees, dental expenses, copays, health insurance payments, eyeglasses and eye exams, and more. You can also get a refundable credit (known as the HCTC or health coverage tax credit) that equals 72.5% of premiums paid by certain taxpayers for coverage of the individual and any qualifying family members under qualified health insurance. Temporary – Full Deduction of Business Meals For 2021 and 2022, the Taxpayer Certainty and Disaster Relief Act has provided a 100% deduction for business meal food and beverage expenses, which is a big jump from previous years where the standard deduction was 50%. Keep in mind, this provision is still considered temporary. Saver’s Tax Credit If you are 18 or older and you make eligible contributions to your IRA or employer-sponsored retirement plan in tax year 2021, you can claim 10%, 20%, or 50% of your …
Smart Ideas for Spending Your Tax Refund
As of May 6, the IRS reported they are holding 29 million tax returns, which means many Americans are still waiting for their refunds. So let’s talk about some smart ways to spend your refund when it comes. Invest in Your Side Hustle or New Business Many people created side hustles in 2020 or started thinking about starting that business they’ve been dreaming about. Why not make that refund money fuel for that dream? Investing your tax refund into a side business is a great way to diversify your income and start building up your new business! Focus on Your Debt Another great way to put your refund to work is to contribute a lump sum to one of your big loans or credit card bills. Paying down those debts with your refund can decrease the total amount of interest you’ll pay over the lifetime of that debt source. Put It in a Retirement Account Saving for retirement is always important, and after a year of income and job loss, it’s also a smart idea to take that refund and put it into a 401(k) or another retirement account. If you don’t have anything pressing that needs to be paid (big debts or upcoming expenses), putting that extra money into your future is always a solid plan. Put It toward Your House Saving for a home? Use that refund to increase your down payment amount. Looking to sell your home in the next few years? Take your refund and choose a home renovation project that you can put that money toward. Make Forward-Looking Investments There are tons of great options for investing in your future. This can include real estate, a tech startup, or stocks. It can also mean putting that money to use by spending it on products and services that either make your life easier or save you money in the long run. Update old appliances in your house – maybe you need a new refrigerator or air conditioning unit that is more energy-efficient. Research meal delivery kits that save you time and money on groceries, or purchase those big-ticket items that …
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How to Check Your Refund Status
Filed your taxes but haven’t received your refund yet? Here’s how to check it. How You File Affects the Processing Time Did you file your tax returns electronically and sign up for direct deposit? Mail paper returns? These things will affect the time it takes for you to receive your refund. If you filed your returns electronically, you can start checking for a refund status using the IRS’s Where’s My Refund? tool on their website as early as 24-48 hours after you submit your files. If you are using a mobile phone to check your refund status, all you need to do is download the IRS2Go app. In order to check your refund status, you’ll need a few things on hand: ITIN or Social Security Number Your filing status The exact amount you are expecting to receive from your refund The Where’s My Refund? tool should show a “Return Received” status within that 24-48 hour window of you filing electronically. Once the IRS finishes checking your returns, the status will change to “Refund Approved”, barring there were no issues with them. Once you receive the Approved status, you should likely receive your refund within 21 days. Once the IRS has sent your refund to your financial institution responsible for direct depositing the money into your bank account, the status will change to “Refund Sent”. If you filed a complete return electronically, your refund should be issued in less than 3 weeks. If you filed your returns on paper and mailed them, you should expect to have your refund six to eight weeks from the date the IRS receives them. Check the Date – Especially for EITC or ACTC The IRS opened their electronic filing on February 12, and as we stated above, you should be able to check your status within a day or two. But it’s also important to note that by law, the IRS can’t issue your refund before February 15. For those who claim Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC), the earliest you can get your …