Some people are exempt from filing a tax return, but this year, all people are being urged to submit one for the 2020 tax year. The reason? The IRS is currently in the process of distributing $1,400 stimulus checks as part of the recently signed $1.9 trillion American Rescue Plan. But if you don't submit a tax return for 2020, the IRS may not realize you're eligible for a stimulus and withhold that money.
Also, a lot of people unfortunately saw their income decline in 2020, compared to 2019. If that happened to you, you may be entitled to a larger stimulus than what you recently received -- and the IRS will bump you up to that correct amount once your 2020 taxes come in and it sees what your most recent annual income looked like.
Of course, if you're new to filing a tax return, you may be worried about doing it wrong or somehow getting audited. If that's the case, here are three important things you should know.
1. Tax audits are very rate
You might think tax audits are really common, but actually, the IRS audits less than 1% of all tax returns it receives. And if your taxes are uncomplicated -- meaning you're simply claiming income from a single job and aren't itemizing deductions -- then there's even less reason to worry. That said, certain tax credits may be subject to further scrutiny, but if you claim only the ones you're entitled to, there shouldn't be anything to worry about.
2. You can file for free if you earn $72,000 or less
Though filing taxes isn't always an expensive prospect, the good news is that if you're a low or moderate earner, it won't have to cost you a dime. Anyone with an income of $72,000 or less is eligible to file a return for free.
Basically, the IRS partners with different tax-prep services so you can access the software you need to get your return done at no cost. And the best part? You won't be upsold products in the course of your free filing that do come with fees.
3. You can get help if you need it
The IRS's Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs offer assistance to filers who need it. To qualify for VITA, you must meet one of these criteria:
- Earn $57,000 or less
- Have a disability
- Have limited English-speaking skills
Furthermore, if you're 60 or older, you can qualify for the TCE program. Both VITA and TCE are free, and all volunteers must go through tax-law training in order to qualify to give out aid.
If you're new to filing taxes, the idea of doing so may be daunting. But fear not, because filing a tax return may prove a lot easier than you'd expect, and you certainly shouldn't let your fear of getting audited stop you from going this route.
The tax-filing deadline this year is May 17, so you still have a little time to get your taxes done. But don't wait, because the last thing you'll want to do is rush through the process and wind up stressed as a result.