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Use the Recovery Rebate Credit Worksheet that comes with your federal tax return to figure how much of a credit, if any, you're eligible for. The 21-line worksheet looks intimidating,
but it's worth the effort if you're missing money. No itemization is required. The amount from the worksheet goes on line 30 of your 1040 form. 4. AND THOSE STIMULUS CHECKS
AREN'T TAXABLE According to the IRS, stimulus payments are not considered income and no tax is owed on the money. Stimulus payments are also not considered income for purposes of
determining eligibility for federal benefits or assistance programs. 5. BUT YOUR UNEMPLOYMENT CHECKS MAY BE TAXABLE Unemployment benefits were a lifeline for many who lost their jobs last
year during the pandemic. Unfortunately, those jobless benefits are taxable — but fortunately, up to $10,200 of 2020 unemployment benefits is exempt from federal income tax for households
with an adjusted gross income under $150,000. Married couples who got unemployment payments can each exclude $10,200 of unemployment benefits. When you signed up for unemployment benefits,
you had the option to have taxes withheld. Whether you did or not, you'll receive a Form 1099-G, “Certain Government Payments,” which will show the amount of unemployment benefits you
received in 2020 and how much, if anything, was withheld for taxes. Any severance pay you received last year is also taxable. Depending on your income and the number of dependents you have,
you may be eligible for the Earned Income Tax Credit (EITC), which could reduce the taxes you owe, dollar for dollar, by as much as $6,660. Like the Recovery Rebate Credit, the EITC is a
refundable credit, which means that you’ll get the full amount of the credit you’re eligible for, even if you had no income and even if it results in a refund. 6. ARE YOU 65 OR OLDER? ENJOY
A BIGGER STANDARD DEDUCTION In order to itemize deductions, you need to have more in deductions than the standard deduction, which everyone gets. For the 2020 tax year, the standard
deduction is $12,400 for individuals and $24,800 for married couples filing jointly, which is up from the $12,200 for individuals and $24,400 for married couples in 2019. It's $18,650
for heads of households, which is up $300 from 2019. Taking the generous standard deduction isn't the worst thing in the world: If you rented your home or didn't have a pile of
other deductions, your standard deduction is probably more than you would get by itemizing. And taking the standard deduction means you don't have to keep a shoebox full of receipts all
year. The standard deduction for 2020 gets even better for age 65-plus taxpayers. Married taxpayers born before Jan. 2, 1956, whether filing jointly or separately, get an extra $1,300
apiece added to their standard deductions. The additional standard deduction is $1,650 for singles and heads of households. You are also eligible for the same additional standard deduction
amounts if you are blind and younger than 65. If you are over 65 and blind, the amounts double. 7. TAXPAYERS AGE 65-PLUS ALSO ENJOY THEIR OWN TAX RETURN