By Erika Davis
NASHVILLE, TN — Soon the deadline to file your federal income tax return will be here. The IRS extended the federal tax return filing deadline to May 17 to have the 2020 federal income tax returns postmarked and in the mail.
Whether or not a person is filing as single, married filing jointly or married filing separately and even small business owners more than likely will welcome any advice or tips on how to file.
Having a reputable CPA that you can trust is valuable. But there are other resources available if you cannot afford a professional. And the IRS website is a good place to start your research, said Dimeta Smith-Knight, CEO and President of Dimeta Smith CPA LLC.
“We heavily promote having a relationship with the tax preparer, Says Smith-Knight. “If you are not able to pay someone and it just depends on your situation, the IRS does offer free filing for people who meet the requirements. If your income is less than $72,000 then you are able to file for free using the IRS website.”
Smith-Knight said that there are other programs available. “There are also other programs throughout the city who offer through United Way called “volunteer income tax assistance” and I highly recommend using those programs, because the preparers are certified through the IRS, then you can trust that you are getting the support that you need and you can ask them questions.”
When filing taxes, a person must have all of their tax income statements on hand starting with a 1040 form to complete. “If you have a child that went to college, if you have a newborn, and you are not familiar with the child tax credit, it is important to use a tax professional to at least learn what you may need, but every return is different, so only qualified tax professionals can give that advice,” says Smith-Knight.
“Anything that has changed in your current situation from previous tax years, maybe you sold a house, maybe you moved out of state. But any life change for the most part has the potential to affect your taxes, so if you are not including a documentation for whatever that life change or life event is, then you could be missing out on some really helpful deductions.”
Claiming charitable donations this year has changed. The itemized deduction is going by the actual dollar amount for this year. If an individual donated or contributed a certain dollar amount to a non-profit or to a church then you can possibly qualify to file that deduction on your tax return.
“Everyone is eligible for $300 worth of contributions and made to any non-profit, if you made a cash donation there, or even if you have given to your church you are able to deduct up to $300 but if you have the ability to itemize then you can deduct even more,” said Smith-Knight.
Keeping receipts and documentations is important if you plan to itemize. If you do not have receipts and you contributed to Goodwill for instance, then there is a way to determine how much the value is for the household items that were donated.
“There is a tracker for determining what the value is and that is with goodwill.org they have that guide where you can determine for how much your contribution may be worth,” said Smith-Knight. “But that is required to qualify for the charitable deduction for household items.”
Last year’s CARES Act provided temporary aid and economic relief to small business owners and individuals. Those individuals who received a stimulus payment have to make sure they report it on their tax returns. “You are required to report what you receive on your tax return, it’s not taxable,” said Smith-Knight.
Small business owners have to file taxes as well. As the CEO and president of Henderson Financial Group Inc., Marcus Henderson, Sr., RFP, AIF, MRFC, highly recommends that small business owners keep record of all expenses.
“You want to make sure you adequately count all of your expenses,” said Henderson. “It’s really, really important, have a strategy session with your CPA, and include receipts pertaining to the execution of your business or profession.”
Henderson also said that a CPA can be beneficial to a small business owner. “You are going to have multiple forms depending on what deductions you are taking. A CPA will always find the deductions that a typical H&R Block or some type of regular outsourcing place will not,” said Henderson. “That is important. For those who can not pay their taxes at that time. file on time and pay as much as you can, then contact the IRS to make payment arrangements for the balance.”