The CARES Act, though, makes them worth considering once more. Is it worth itemizing charitable deductions this year?Ĭharitable donations, for a while, seemed like a major headache when it came to reducing your tax liability after the sweeping tax law changes of 2018. If you put the funds back into your account within three years, you can get a refund on the taxes you’ve paid. If you were one of those, yes, you will have to pay taxes on the money, but the news isn’t all bad. The CARES Act let people under 59½ withdraw up to $100,000 from their retirement plans without penalty last year. I had to withdraw money from 401(k) or IRA. If you had already filed your taxes before that date and paid taxes on unemployment, the IRS is working on a fix that will save people the effort of filing an amended tax return and still refund them what they paid for unemployment benefits. (The break is $20,400 for two workers in a married couple filing taxes jointly.) The bill, signed into law by President Joe Biden on March 11, made the first $10,200 of unemployment income tax-free for people with adjusted gross income of less than $150,000 in 2020. So, if your company sent you home for the majority of last year, you won’t be able to write off your spare bedroom or any of your utilities. Home office deductions are reserved for self-employed individuals. The standard deduction for most taxpayers actually increased in 2020, owing to inflation. It will, however, depend in part on how you file. What are the tax brackets for 2020–2021?Īfter the changes of the past few years, even accountants are a little confused, so it’s not a bad idea to see if your bracket has changed. Those individuals have 180 days after they leave the area to file and pay taxes. Special rules apply to people serving in the Armed Forces who are in a combat zone or contingency operation, or have been hospitalized owing to an injury sustained in such an area. Not ready when the deadline comes around? You can file for an extension before that date. You’ve now got until May 17 to file your taxes, a roughly one month extension from the usual deadline. All totaled, over 150 million individual tax returns are expected to be filed this year. The start of tax season is one of two peak times for the IRS, as people with relatively simple tax filings and those expecting big refunds often file as soon as possible. Without that testing, there could have been a delay in the turnaround time on refunds. That was a lot later than last year-nearly two and a half weeks later, in fact-as the IRS needed time to program and test its systems after the tax law changes passed in December as part of the second round of stimulus checks. The Internal Revenue Service began accepting and processing tax returns for the 2020 tax year on Feb 12.
Before you dive headfirst into your receipts, we’ve put together answers to some of the most frequently asked questions for the 2020 tax season.