How Coronavirus and Routine Changes Impact 2020 Tax Returns

No matter your financial situation, the coronavirus pandemic will likely have an impact on your 2020 tax return.  Even in the best of years, it can be difficult to wade through tax code and make the right decisions when it comes to filing. Now add in billions of dollars of federal money bundled as direct payments, loans or unemployment benefits, and you need to know how this year’s unique circumstances are being viewed by the IRS.

Coronavirus Considerations

As a Dave Ramsey Endorsed Local Tax Provider, it’s my job to know the rules.  Here’s a list of things you’ll need to consider as you file:

• Stimulus money is not considered taxable income
• You must pay taxes on 401(k) hardship withdrawals.
• Unemployment benefits are taxable.
• You will owe income tax on side jobs.
• Depending on where you live, you could have a tax liability for working from home.
• The home office tax deduction is only available if you’re self-employed.
• If you used 529 plan money to pay for college and got a refund from your school, you owe taxes on the money unless you refund your 529.
• If your employer deferred your payroll taxes, you will have to make up the difference in early 2021.
• If you had lots of medical bills in 2020, you may be able to deduct some of your expenses if you itemize.

For more details on any of these topics, read what Dave Ramsey has to say.

Schedule an appointment today. You can reach Chris by calling 217-679-1676.

Plan for Annual, Routine Changes

Each year the federal government tweaks the tax code. Here’s what you should be aware of and plan for before completing your tax forms:

• 2020 tax rates are unchanged, but there are slight changes to the brackets which have been adjusted to account for inflation.
• The standard deduction rate is going up slightly.

What Taxpayers Often Overlook

Since most people only look at their taxes when it’s time to file, it’s easy for them to overlook key ways to save on what they owe. For example, both the Earned Income Tax Credit and Child Tax Credit can mean thousands of dollars in your pocket.

Don’t overlook anything! Schedule an appointment with me or another INB tax specialist, and we’ll even take a look at what you filed in 2019 to determine if you should file an amended return.