Child tax deduction, stimulus check: Here’s what you need to know before filing your tax return
Child tax deduction, stimulus check: Here’s what you need to know before filing your tax return

Child tax deduction, stimulus check: Here’s what you need to know before filing your tax return

CHICAGO, IL – No pressure, but the tax day countdown is underway!

We’re two months away from the April 18 deadline to file your taxes, and you may want to start working on them now.

There are a significant number of changes that will apply to the tax year 2021.

WGN News Now got some helpful tips on preparing taxes from Dan Rahill, CEO of Wintrust Management, and a CPA.

Rahill said taxpayers need to be aware Economic impact payments, commonly called stimulus check. He said 175 million people received stimulus checks in March 2021 based on 2019 and 2020 tax return data. According to Rahill, you could owe money if you did not receive the full tax deduction.

Rahill said many families may also qualify for further Child tax deduction and do not know. This is because credit was increased under President Biden’s US rescue plan in March. Rahill said qualifying families need to make sure they get the extra credit on their 2021 tax return.

There have also been some changes in charitable contributions, as individuals who do not specify their deductions can now take a deduction of up to $ 300, while shared files can take a deduction of $ 600. He also points out that these deductions must be cash.

Unemployment benefits are also changing, as you now have to pay tax on the full amount of your unemployment. In 2020, the first $ 10,200 in compensation was not taxable, according to Rahill, but now it is taxable.

If you worked remotely during the pandemic, you may have to pay taxes to more than one state. If you live in a state that is different from where your business is based, you may owe taxes in several states. He adds that if you work remotely outside the state with your parents, friends or a cottage during the pandemic, you may well also owe taxes in more than one state.

If you used cryptocurrency to make a purchase, even if it was for a sandwich, Rahill said buyers are required to report the transaction as taxable to the IRS. He also adds that if crypto is held in a taxable account, the net profit from a sale is taxed as long- or short-term capital gains, and losses can be used to offset gains.

Rahill also reminded people over the age of 72 to make their required minimum distributions. RMDs are the minimum amount you must withdraw annually from your pension accounts if you meet certain criteria.

He urged everyone to file electronically if possible and advises people to check out the IRS’s free online tax preparation known as Free file or contact Illinois CPA Society.

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