How Long to Keep Documents for Taxes: Rules and Tips
Tax season will be here in a a flash and the easy answer is to keep three years worth of documents for your tax purposes. BUT...
...2020 was no ordinary year for many reasons, including several reasons that may affect your taxes.
- TO BE CLEAR: This post included simple points to be aware of, not financial advice. Please take these suggestions as items of interest and consult with your tax advisor.
- KEEP ALL OF YOUR 2020 DOCUMENTS AND RECEIPTS. There are two major things that might change your tax burden for the year: Earned income changes and charity donations.
Many folks saw their income change in 2020, and often not for the better, even with a stimulus check. That means that your tax bracket may have changed too. 2020 Federal Income Tax Brackets and Rates:
THE GOOD NEWS: According to the Internal Revenue Service:
"Are stimulus checks taxable? The short answer: No.
In the somewhat longer words of the IRS: “No, the payment is not income and taxpayers will not owe tax on it.
The payment will not reduce a taxpayer's refund or increase the amount they owe when they file their 2020 or 2021 tax return next year."
CHARITABLE DEDUCTIONS: There's also good news on this front since many people who were capable of doing so, donated to local charities given the tough economic circumstances. Again, according to the Internal Revenue Service:
Following special tax law changes made earlier this year, cash donations of up to $300 made before December 31, 2020, are now deductible when people file their taxes in 2021.