A 'most important’ filing season
Typically, the IRS begins accepting returns in late January. But the tax agency says if it had tried to start the clock normally, there could have been delays in issuing refunds — and waiting for your refund check is hard enough as it is, especially if you need that money to pay bills or reduce your debt.
"Given the pandemic, this is one of the nation's most important filing seasons ever," says IRS Commissioner Chuck Rettig in a news release.
Officials say the IRS expects to receive more than 160 million tax returns from consumers this year, and about 90% will be submitted electronically. At least 8 out of 10 taxpayers will opt to get their refunds via direct deposit.
"The pandemic has created a variety of tax law changes and has created some unique circumstances for this filing season," Rettig says. "To avoid issues, the IRS urges taxpayers to take some simple steps to help ensure they get their refund as quickly as possible, starting with filing electronically and using direct deposit."
One of the big changes is a new $300 tax deduction for charitable donations, which is an "above-the-line" write-off — meaning you can claim even if you don't itemize deductions.
How to get cracking on your taxes
To get going on your taxes, pull together your W-2s and any other necessary paperwork. You can complete your return using one of today's easy-to-use tax software options, or with the help of a tax professional.
Some of the tax software providers, including H&R Block, will connect you with a tax pro if you're having issues with your return.
If you file your taxes and there are no problems, you'll likely get your refund within 21 days of filing. You'll receive your money most quickly — often within a week — if you e-file and take a direct deposit.
And note that while tax season got off to a late start, the deadline for filing your return and paying any taxes owed is still the same: April 15.
Find out exactly what forms and information you’ll need to complete your taxes with the help of this handy tax-filing guide.
What if you need a lift before your refund arrives?
According to the IRS, last year’s average tax refund was more than $2,500. If the coronavirus is squeezing your family finances, that money probably can’t come soon enough. Here are a few ways to pull together some cash in the meantime:
Refinance your mortgage and slash your payments. Mortgage rates are still sitting close to record lows, and refinancing your existing home loan could provide major savings. Mortgage tech and data provider Black Knight says 16.7 million U.S. homeowners could cut their monthly house payments by an average $303 per month through a refi.
Stop overpaying for insurance. Driving less during the pandemic? Ask your insurance company if it will cut your rate. If your insurer won't give you a break, maybe it’s time to shop around for a lower price. You also can save hundreds on your homeowners insurance by doing some comparison shopping to find a better deal.
Review your budget for savings. Dump any subscription services you're not using. Do more of your own cooking and don’t order takeout as much. Download a free browser add-on that will save you money every time you shop online by instantly checking for better prices and coupons. And, use a free app to help you hammer out your budget in 2021.
Turn your hobby into cash. Have any in-demand skills? You could turn them into a lucrative side hustle using the world’s largest online marketplace for digital services. Create a profile describing what you bring to the table, and people will find you based on what they’re looking for.