What’s New in 2021
Recovery Rebate Credit
You may be able to receive a Recovery Rebate Credit if you are eligible for the first round of Economic Impact Payments and one of the following applies:
You didn’t receive an Economic Impact Payment in 2020
You are single and your payment was less than $1,200
You are married, filed jointly for 2018 or 2019, and your payment was less than $2,400
You didn’t receive $500 for each qualifying child
Learn more: Recovery Rebate Credit (IRS)
New Charitable Deduction Allowance
Taxpayers who don’t itemize deductions can take a charitable deduction for cash contributions up to $300 in 2020 to qualifying organizations.
Learn more: How the CARES Act changes deducting charitable contributions (IRS)
Coronavirus-Related Distributions
The CARES Act provided special coronavirus-related distribution options for retirement plans and IRAs.
Learn more: Coronavirus-related relief for retirement plans and IRAs questions and answers (IRS)
No minimum distribution requirement from IRAs
In 2020, the RMD rule was suspended and those taken in 2020 are considered eligible for rollover.
Learn more: Seniors, retirees not required to take distributions from retirement accounts this year under new law (IRS)
Refund Interest Payment
If you timely filed your 2019 federal income tax return and received a refund, you may have received an interest payment from the IRS. These payments are taxable and must be reported on your 2020 federal income tax returns. In January 2021, the IRS will send a Form 1099-INT to those who received an interest payment of at least $10.
Learn more: 13.9 million Americans to receive IRS tax refund interest; taxable payments to average $18 (IRS)
Opt-in to the Identity Protection PIN Program (IP Pin)
Starting mid-January, taxpayers have the option to opt into the new Identity Protection PIN Program. This PIN will is only known to you and IRS and will have verify your identity and help prevent someone else from filing a tax return using your social security number.
To opt-in and learn more about the program, visit: Get an Identity Protection PIN (IP PIN) (IRS)
Disclaimer: This material is prepared for informational purposes only, and is not tax advice. Please speak with a tax professional to see how this information may apply to you.
