With the new tax day extended to May 17th, you may be wondering what else has changed about your taxes this year due to the pandemic. We hope this article helps answer some of your questions. Please be sure to check out the links because not all of these changes will apply to every family.
This year, there is a new tax day (May 17th instead of April 15th) because the IRS and Treasury Department wanted to make this time easier on Americans. They say “the IRS wants to continue to do everything possible to help taxpayers navigate the unusual circumstances related to the pandemic.” Plus the IRS is overwhelmed with sending out relief checks as well as keeping up with tax refunds. It’s a difficult job, so if you know anyone in the IRS or tax industry, check in on them! Don’t’ wait too long to file your taxes though, because the IRS reports “Even with the new deadline, we urge taxpayers to consider filing as soon as possible, especially those who are owed refunds. Filing electronically with direct deposit is the quickest way to get refunds, and it can help some taxpayers more quickly receive any remaining stimulus payments they may be entitled to.”
The simplest answer is no, they aren’t going to be taxed. However, the full answer is: Your stimulus check will not be federally taxed, but your state may tax it for themselves. Here are the states where your stimulus check could end up being taxed: “Arizona, Georgia, West Virginia, Alabama, Arkansas, Florida, Idaho, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Oklahoma, South Carolina, South Dakota, Texas, Utah, and Wyoming”. Governor Jim Justice of West Virginia claims, “Congress may not micromanage a state’s fiscal policies in violation of the anti-commandeering principles nor coerce a state into forfeiting one of its core constitutional functions in exchange for a large check from the federal government.” This provision in the relief bill has been sent to the Senate but is considered a “long shot”.
Of course you can – if you’re self-employed! This one hasn’t changed, friends. While millions more people worked at home during 2020, the rules for home office deductions are the same. You must be self-employed to deduct this on your personal taxes. On the other hand, if you own a business, you can deduct your expenses as usual on your business’ taxes. Don’t forget, your home office must be in its own special location. You can’t claim home office deductions for your kitchen table if it’s also used for eating meals.
This one you can claim on your taxes and get credit for it. However, you must be able to prove that your side hustle is not just a hobby but “regular and continuous”. Don’t forget to deduct your expenses for your side gig! This will result in much more money coming back to you in your refund. You can deduct:
If you’re looking for more resources to learn about how the COVID-19 pandemic affected your 2020 taxes, please take a look at these websites!
According to Experian, in 2020 the average American carried over $92,000 in debt including debt ranging from credit card balances to mortgages to auto and ...
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