Page 33 - BusinessWest February 3, 2021

• Interest You Paid
— 1098-Misc – mortgage-interest statement
— Interest paid to private party for home purchase
— Qualified investment interest
— Points paid on purchase of principal residence
— Points paid to refinance (amortized over life of loan)
— Mortgage-insurance premiums
• Gifts to Charity (For 2020, filers who claim the standard deduction can take an additional deduction up to $300 for cash contributions.)
— Cash and check receipts from quali- fied organization
— Non-cash items, which need a sum- mary list and responsible gift calcula- tion (IRS tables). If the gift is more than $5,000, a written appraisal is required. — Donation and acknowledgement letters (over $250)
— Gifts of stocks (you need the market value on the date of gift)
• Additional Adjustments (Non-Sched- ule A)
— 1098-T – Tuition statement
— Educator expenses (up to $250)
— 1098-E – Student-loan interest deduction
— 5498 HSA – Health savings account contributions
— 1099-SA – Distributions from HAS — Qualified child and dependent care expenses
— Verify any estimated tax payments (does not include taxes withheld)
Sole proprietors (Schedule C) or owners of rental real estate (Schedule E, Part I) need to compile all income and expenses for the year. You need to retain adequate documentation
to substantiate the amounts that are reported.
Other Items to Consider
Identity-protection PIN
If you are a confirmed identity-theft victim, the IRS will mail you a notice with your IP PIN each year. You need this number to electronically file your tax return.
Starting in 2021, you may opt into the IP PIN program. Visit www.irs. gov/identity-theft-fraud-scams/get- an-identity-protection-pin to set up your IP PIN. An IP PIN helps prevent someone else from filing a fraudulent tax return using your Social Security number.
What If You Have Been Compromised?
How do you know if someone has filed a return with your information? The most common way is that your tax return will get rejected for e-file. These scammers file early. You may also get
a letter from the IRS requesting you verify certain information.
If this does happen, there are steps to take to get this rectified:
Affidavit).
2. Paper-file your return.
3. Visit identitytheft.gov for addi-
tional steps.
New for 2021: Recovery Rebate Credit
Eligible individuals who did not receive a 2020 economic impact pay- ment (stimulus check), or received a reduced amount, may be able to claim the Recovery Rebate Credit on their 2020 tax return. There is a worksheet to use to figure the amount of credit for which you are eligible based on your 2020 tax return. Generally, this credit will increase the amount of your tax refund or lower the amount of the tax
you owe.
Who Will Prepare My Return?
Are you going to be preparing your tax return, or will you hire someone
to file on your behalf? You might want to plan that out now so you know the required information you will need and the fee structure you can expect
to pay for completion of all applicable forms. In addition to all the items listed above, the tax preparer will ask you for a copy of your last tax return that was filed. The IRS offers a ‘file free platform’ to file your tax return if your income is under $72,000. You can find this at irs. gov or the IRS2Go app. There are also
some local tax-assistance and counsel- ing programs, depending on your age and income levels (VITA/TCE).
Interactive Tax Assistant
The Interactive Tax Assist (ITA) is an IRS online tool (irs.gov) to help you get answers to several tax-law items. ITA can help you determine what income is taxable, which deductions are allowed, filing status, who can be claimed as a dependent, and available tax credits.
Checklist
Continued on page 34
This tax season brings many new changes and opportunities. At
MBK, we work closely with you to help you understand how these changes affect your business objectives, personal goals and fiduciary responsibilities. We then build on that knowledge to develop effective, proactive tax strategies that are customized to your specific needs.
330 Whitney Avenue | Suite 800 | Holyoke, MA 01040 | 413-536-8510 | mbkcpa.com 413-536-8510 | mbkcpa.com
1. File Form 14039 (Identity Theft
ACCOUNTING & TAX PLANNING
FEBRUARY 3, 2021 33
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