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FREE CONSULTATION818-436-2775
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2020 Tax Tips: Impacted by COVID-19? Here’s What You Need to Know

Are you one of the millions of Americans whose employment has been impacted by COVID-19?

With tax season approaching, it’s important to start preparing, but due to COVID-19’s impact on the economy, tax time is likely to be trickier for most people than normal years. Several factors are taken into account, from unemployment taxes to transitioning to working from a home office before filing your 2020 tax return.

Here are a few helpful 2020 tax tips to keep in mind when you sit down to file your return.

COVID-19 & Taxes: What You Need to Know

Whether you lost your job, are working from home, or are curious about the impact of your stimulus check on your taxes, here are a few important points to keep in mind when filing your 2020 tax return.

Remote Work

If you’re a W-2 employee who has been forced to start working from home due to the pandemic, you may be curious about whether or not you can deduct home office expenses.

Unfortunately, the Tax Credit and Jobs Act eliminated the ability of W-2 employees to claim deductions for these expenses. Only self-employed individuals and small business owners may claim these expenses.

However, some workers may be able to seek tax-free reimbursements from employers for remote work-related expenses, like computer monitors and similar equipment.

Unemployment Benefits

Taxpayers who lost their jobs and claimed unemployment will need to include unemployment income on their return as it is taxable. Unemployment recipients are able to choose whether or not federal taxes are automatically withheld from their weekly checks.

While unemployment is subject to federal taxes, be sure to check your state’s tax laws as not all states collect taxes on unemployment benefits.

Stimulus Checks

The $1,200 stimulus checks disbursed earlier in the year as a result of the CARES Act are not taxable.

If you did not receive the payment you were owed or only received a partial payment, you can collect the rest of what you are owed when you file your 2020 return via the Recovery Rebate Credit. Also, if you did not receive a stimulus payment due to having too high of an income, but your income has dropped, you may be eligible to claim this tax credit on your 2020 return.

Filing Dates

There is still uncertainty regarding when tax season will officially open and will tax returns will be due. Last year’s due date was delayed due to the pandemic; however, there have been no announcements regarding this year’s filing deadline.

Charitable Deductions

The CARES Act introduced a temporary deduction that allows taxpayers to deduct up to $300 in charitable cash donations. This applies whether you itemize your deductions or claim the standard deduction.

By claiming this deduction, you can lower your taxable income for the 2020 tax year.

Need Help? Contact ATPP

2020 has been an unusual year, to say the least. Due to the unique circumstances that many taxpayers have been placed in, it’s important to take the time to understand how these changes may affect your tax return.

By following the tax tips listed above, you can maximize your deductions and avoid penalties due to failing to report taxable unemployment income.

If you need help understanding how to file your taxes under these unusual circumstances, feel free to contact ATPP to learn more about your tax obligations and how we can help you file your return accurately.