1. Keep Economic Impact Payment notice with other tax records
People who receive an Economic Impact Payment this year should keep Notice 1444, Your Economic Impact Payment, with their tax records. This notice provides information about the amount of their payment, how the payment was made and how to report any payment that wasn't received.
For security reasons, the IRS mails this notice to each recipient's last known address within 15 days after the payment goes out. It's especially important for people to keep this notice if they think their payment amount is wrong. When they file their 2020 tax return, they can refer to Notice 1444 and claim additional credits, if they are eligible for them.
2. Taxpayers may be able to claim the Recovery Rebate Credit if they met the eligibility criteria in 2020 and:
They didn't receive an Economic Impact Payment this year, or
Their Economic Impact Payment was less than $1,200 ($2,400 if married filing jointly for 2019 or 2018) plus $500 for each qualifying child.
For additional information about the Economic Impact Payment, taxpayers can visit the Economic Impact Payment Information Center.
3. Interest on refunds taxable. Taxpayers who received a federal tax refund in 2020 may have been paid interest. Refund interest payments are taxable and must be reported on federal income tax returns. In January 2021, the IRS will send Form 1099-INT to anyone who received interest totaling $10 or more.
4. Charitable deduction changes. New this year, taxpayers who don't itemize deductions may take a charitable deduction of up to $300 for cash contributions made in 2020 to qualifying organizations. For more information, read Publication 526, Charitable Contributions.
Following tax law changes, cash donations of up to $300 made this year by December 31, 2020 are now deductible without having to itemize when people file their taxes in 2021.
5. Coronavirus-related relief for retirement plans and IRAs Q&A
Q1. What are the special rules for retirement plans and IRAs in section 2202 of the CARES Act?
A1. In general, section 2202 of the CARES Act provides for expanded distribution options and favorable tax treatment for up to $100,000 of coronavirus-related distributions from eligible retirement plans (certain employer retirement plans, such as section 401(k) and 403(b) plans, and IRAs) to qualified individuals, as well as special rollover rules with respect to such distributions. It also increases the limit on the amount a qualified individual may borrow from an eligible retirement plan (not including an IRA) and permits a plan sponsor to provide qualified individuals up to an additional year to repay their plan loans. See the FAQs below for more details., from IRS website: