Keep these important tips in mind as you begin to prepare and file your taxes.
Direct Deposit is the safest and fastest way to receive a tax refund. Setting up direct deposit is not just quicker and more secure, it’s also a particularly good solution if you don’t have an address where you can reliably receive mail. If you do not have a bank or credit union account, you can explore account options that are safe, affordable, insured and can be opened remotely .
Electronic filing (E-file), including Free File, is the best way to avoid pandemic-related paper delays. E-file is faster, easier and more accurate than filing a paper return. Choosing E-file and direct deposit for refunds remains the fastest and safest way to file a complete and accurate income tax return and receive a refund. Most E-filers get their refunds faster and it is often free.
Learn more and ask questions when preparing your taxes about valuable tax credits that you may be eligible to receive such as:
- The Earned Income Tax Credit helps low- to moderate-income workers and families get a tax break. If you qualify, you can use the credit to reduce the taxes you owe – and maybe increase your refund, including persons with disabilities.
- The Child Tax Credit (CTC), a fully refundable credit for 2021, provides a credit of up to $3,600 per child under age 6 and $3,000 per child from ages 6 to 17. Fifty percent of the credit amount was paid in advance in 2021 to eligible families unless they opted out of the payments. In order to receive the remaining Child Tax Credit due to you if eligible, you must file a 2021 tax return.
- Keep in mind that for tax years 2020 and 2021, the IRS is allowing you to lookback and choose whether to use your 2019 or 2020 income to receive the most credits for which you are eligible and determine your eligibility for the EITC or the CTC.
- If you paid someone to care for your child or other qualifying person so you (and your spouse if filing jointly) could work or look for work, you may be able to take the Child and Dependent Care Credit, a credit for child and dependent care expenses.
- Learn about potential Disability Tax Benefits.
- Additional questions about the Recovery Rebate Credit visit IRS’s Frequently Asked Questions page.
Remember, if you received unemployment compensation it is taxable. Some people may have received a Form 1099-G from the agency paying the benefit to them, but some states do not mail this form and you may need to get the electronic version from your state’s website. If you suspect identity theft involving unemployment benefits, the IRS offers guidance on this topic.
There are additional ways to receive assistance for your questions from IRS including help in other languages and taxpayer advocate services.
Beware of scams! Keep in mind that the IRS doesn’t initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information. Recognize the telltale signs of a scam and how to know if it’s really the IRS calling or knocking on your door.
The money you get in this year’s tax refund could help cover necessities like food, bills, rent or mortgage payments. You may also be able to use some or all of your tax refund to open a savings account or an ABLE account if you are eligible. Learn more about ABLE accounts and eligibility by visiting our ABLE National Resource Center. Learn more about using your tax refund to start an emergency fund to kickstart your savings and begin building your financial resiliency.
Finally, if you do choose to use a paid preparer, plan in advance.