Just because Taxation rhymes with Procrastination is no reason to put off the inevitable.
Yes, the ghost of 2020 will continue to haunt you until you get your taxes finished and filed. The sooner you get it done and over with, the better, so gather up those documents! Sort those files! Get those Quickbooks entries up to date! All of your W-2, 1098, and 1099 forms should be received by January 31st, so go-go-go!
The standard deduction for 2020 increased to $12,400 for single filers and $24,800 for married couples filing jointly and income tax brackets increased in 2020 to account for inflation, so you’ve got that going for you.
Of course, 2020’s worldwide pandemic has a financial impact on this year’s taxes as well.
- Unemployment: Many people lost their jobs, either permanently, or temporarily, during the pandemic. If you received unemployment benefits, know that these benefits – including the enhanced legislated benefits – must be reported as income. Failure to report this income could result in taxes owed to the IRS, and failure to pay could result in potential penalties and interest as well, as taxes are only withheld from this money at the recipient’s request.
- CARES: Money sent to American households in the form of direct payments, $1,200 under the CARES Act and $600 per the most recent legislation passed by lawmakers, does not count as taxable income for 2020.
- Rebate Credit: Taxpayers who received an Economic Impact Payment, should keep Notice 1444, Your Economic Impact Payment, with their 2020 tax records. They may be eligible to claim the Recovery Rebate Credit on their tax year 2020 federal income tax return if:
- they didn’t receive an Economic Impact Payment, 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 they had in 2020.
- PPP: Business owners who received loans from the Paycheck Protection Program originally were not eligible to claim regular deductions if expenses were paid for using money that was forgiven under the program, but legislators recently changed that requirement for business owners who might be eligible for another loan in the upcoming round.
- Telecommuting: Many who kept their jobs found themselves working remotely from home. If you live and work in two different states, you may have to file multiple state income tax returns this year. Every state has its own requirements, so you’ll want to check into that if it applies to you – or better yet, let your tax professional check into it and do the heavy lifting for you.
April 15, 2021, is the deadline to file your taxes or to file an extension request.
But when you file your taxes early, April 15 goes from being the dreaded Tax Day to becoming a mighty nice day for a picnic. You get to sing, be lighthearted, and look fabulously relaxed while the last-minute folks around you glower and stress. After all, nobody looks good with veins pulsing out on their forehead.
Sometimes the best thing to do is to reach out to a professional and get help.
You’re already an expert on so many things, so why not let someone else take over the reins now and then so you can take a break and keep from pulling your hair out? It’s perfect advice at tax time and when you’re looking to buy or sell a home or business property. Need tax help? Keven Rotenberry and Padgett Business Services is the person I trust to help me maximize my tax opportunities for business. Others do as well. Padgett Business Services just won Best in the Valley from The Desert Sun. Call him at 760-322-8704. And for your real estate needs in the desert? That’s where I come in. I’m Stephen Burchard, The Desert Bowtie Realtor, taking the (k)nots out of real estate.