The IRS has now opened up for filing of 2020 tax returns. You must file your tax return by April 15, 2021.
DECEPTIVE SERVICES BY TAX SOFTWARE COMPANIES
INCOME TAX 1040 – About a year ago, the IRS took steps to stop the tax software companies from saying they were offering free tax forms, and then turning around and charging people. They found that 70 percent of filers qualify for the IRS free program but few use it. This may be partially due to the taxpayer being steered away from the government web pages through online searches. All you need is a computer and an email address in order to get started at www.irs.gov/freefile.
Taxpayers think that it doesn’t matter if they go to the IRS page or the software page to find the free form. But, it has been found that if you start the process from TurboTax.com, it is almost impossible to find the free version. The company itself admitted this during the investigation.
There are two forms that have very similar names. The “Free Edition” is the one that is seen in the advertisement of their commercial products. It is only free for people with the simplest taxes. The company labels the truly free version ”Freedom Edition.” Plus, “Free Edition” is not the same as the TurboTax’s “Free File” edition.
Even the most simple form, “Free Edition,” can trick you into giving you offers that make you pay. If you search for free tax filing, the software companies have inserted coding that will take you to their web pages.
The TurboTax’s “Free File” edition was the form that was required as part of the industry’s deal with the IRS. You are eligible to use it if you make less than $34,000 per year. If you make under $72,000 per year (adjusted gross income), you are still eligible to prepare and file your taxes for free under the “IRS Free File” program.
On TurboTax’s web site, it says “Free File Program.” But you should go to the IRS web site. When you click through to the second page, you will find a whole new set of choices and restrictions.
Each of the 12 companies that have signed up with the IRS offer its own Free File product. But they all have different requirements based on age, income and location. H&R Block no longer participates in the government program.
The problem is that, for years, the tax software companies have strong lobbyists who are trying to stop bills from being passed that will hurt their sales. They do not want the government form 1040 to become too simple. The IRS has considered developing its own free form, like other countries. There are other countries that have forms that only take minutes to fill out.
Note, if you made under the designated income level and were charged for the filing, you should contact the software company and ask for a refund.
AARP TAX HELP
AARP will have tax filing help for seniors at libraries and senior centers that are open. See the SENIOR NEWS column this week for more information.
Didn’t Get Your Economic Impact Payments? You May Be Eligible to Claim the Recovery Rebate Credit
All first and second Economic Impact Payments have been sent (as of January 31). Check your final payment status in Get My Payment.
If you didn’t get any payments or got less than the full amounts, you may qualify for the Recovery Rebate Credit and must file a 2020 tax return to claim the credit even if you don’t normally file (eg, don’t make enough income to pay taxes)
See Recovery Rebate Credit for more information.
NON EMPLOYEE COMPENSATION reporting: NEW 1099 form reporting this year 2020
Important Form 1099-NEC Information – do not use 1099 MISC.
Beginning January 15, 2021, you can submit Form 1099-NEC to the Colorado Department of Revenue via email, due by January 31.
BUSINESS FEDERAL TAX CREDITS
Many businesses that have been severely impacted by coronavirus (COVID-19) will qualify for new employer federal tax credits – the Credit for Sick and Family Leave and the Employee Retention Credit.
FEDERAL 2020 CORONAVIRUS TAX QUESTIONS:
For more information on Coronavirus Tax Payments, go to https://www.irs.gov/coronavirus-tax-relief-and-economic-impact-payments There are a large number of items that have taken place this past year that will have impact on your 1040 filing.
FEDERAL TAX TREATMENT OF UNEMPLOYMENT INSURANCE
Withholding estimated taxes; and reporting forms.
CO BUSINESS SALES TAX DEDUCTION:
A temporary state sales tax deduction is now available for qualifying retailers primarily in the bar, restaurant, and the mobile food services industries. The deduction allowed is to be retained by the business to provide assistance from business disruptions due to COVID-19 pandemic. Visit the COVID-19 Sales Tax Relief web page for more information and filing instructions.
Home page for Colorado income tax filing: https://tax.colorado.gov/
Did You Receive a 1099-G for COLORADO Unemployment Benefits You Did Not File For?
Taxpayers who receive an incorrect 1099-G form for unemployment benefits they did not receive should contact the Colorado Department of Labor & Employment (CDLE) to request a revised Form 1099-G showing they did not receive unemployment benefits. To report that you have received an incorrect/invalid 1099-G to CDLE, complete the Report Invalid 1099-G Form. For more information, visit the CDLE website. Taxpayers should still file an accurate tax return, reporting only the income they received.
COLORADO- Links to Various TAX HELP 2020
SCAMS AND PHISHING:
The IRS doesn’t initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information. This includes requests for PIN numbers, passwords or similar access information for credit cards, banks or other financial accounts.
They will not call you for Tax Audits and Taxes Due. You will receive a letter in the mail.
Go to this page for answers, and how to report this to the IRS: https://www.irs.gov/privacy-disclosure/report-phishing