The views expressed in Economy Matters are not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System.
Editor's note: Throughout Economy Matters, "Southeast" refers to the six states that, in whole or in part, make up the Sixth Federal Reserve District: Alabama, Florida, Georgia, Louisiana, Mississippi, and Tennessee.
Financial Tips from the Atlanta Fed: Tax Tips for the New Year
Nota del editor: Este artículo también está disponible en español.
Although the pandemic led the IRS to grant an extension for filing taxes last year, this year’s deadline is scheduled for the regular Tax Day, April 15. While even Albert Einstein himself once said that the income tax is the “hardest thing in the world to understand,” below you will find resources and tips to simplify tax season—and maybe even save you money in the process.
- Economic impact payments (commonly called stimulus checks) do not count as taxable income and will not reduce your refund or change any amount you may owe. Eligible filers who did not receive a payment or who received less than the full amount may be eligible for a Recovery Rebate Credit on their returns.
- Free online tax preparation is available to taxpayers with an adjustable gross income of $72,000 or less through the IRS Free File program. Free basic tax return preparation may also be available in your local area through programs such as the IRS Volunteer Income Tax Assistance and Tax Counseling for the Elderly. Taxpayers making $57,000 or less, persons with disabilities, taxpayers with limited fluency in English, and people age 60 or older qualify.
- Make sure you receive all the tax credits you are eligible for, especially if the pandemic affected your income. Low- and moderate-income workers with qualifying children may be eligible to claim the Earned Income Tax Credit, a refundable tax benefit that could reduce the amount of taxes you owe or increase your refund.
- Tax season is a great time to get a head start on saving. Plan in advance to save all or part of your refund. You can deposit any part of a refund that you want to save into a separate account when you file your income tax return.
Although many workers began working from home in 2020 due to the Covid-19 pandemic, employees (workers who receive a W-2) are not eligible to claim the home office deduction, even if they set up a dedicated home office.