SACRAMENTO, Calif. — Taxpayers may have been relieved to find out the tax filing deadline was extended from April 15 to May 17. That gives those planning to file more breathing time to get their 2020 income taxes organized. Here's a guide that breaks down everything you need to know before and after you file.
FAQ
Answers to your burning 2020 taxes questions from everything about tips before you file, to when you’ll receive your refund.
Tax write-off tips
A local tax expert explains if you withdrew money from their retirement, you don't have to pay the 10% tax penalty. You may also be able to write off some expenses if you worked from home during the pandemic.
If you have been working home during the pandemic, you may be wondering if you could write off some of your home expenses. If you’re self-employed then yes, but the ability to write off home office expenses went away in 2018 for most W2 employees.
The IRS said educators who purchased protective items for COVID-19 and have not been reimbursed can write them off on their taxes with a limit of $250.
We spoke with a local tax expert who shared advice for what you can deduct such as charitable donations and PPP loan expenses. You should also be prepared to pay taxes if you’re a gig worker.
Unemployment
Initially, unemployment benefits were considered taxable income. Fast forward to The American Rescue Plan Act, which includes a provision that makes the first $10,200 in unemployment benefits nontaxable. That means you won't pay taxes on unemployment income. The IRS released information on what this means for you.
The IRS plans to refund those who paid taxes on unemployment benefits before Congress voted to make much of that money tax free. Here’s who can expect an automatic refund in the next few months.
Details for who and when the IRS plans to issue refunds for those who paid their taxes on unemployment benefits prior to the American Rescue Plan passed on March 11.
How stimulus payments can affect your return
How unemployment and stimulus payments affect taxes and tips on getting ready to file.
While most Americans have received their stimulus checks already, some might wonder why their payment was less or more than what they were expecting. Filing your taxes early or late this year can change the amount of your future stimulus check if your income changed from 2019 to 2020.
Here are some common questions and answers about how stimulus payments affect filing your taxes.
If you did not receive the first or second stimulus, or received less than you were eligible for, Line 30 on your return is where you will find the Recovery Rebate Credit to claim your payment.
Typically, borrowers have to pay a 10% tax penalty if they pull from their 401(k) plans before retirement age. However, the CARES Act waved that penalty in 2020 as long as the withdrawal was coronavirus-related. Talk to your tax professional about your options if you had to tap into your 401(k).
The Verify team breaks down how to correct already filed forms to what to do about the stimulus check.
If you didn't receive your first or second coronavirus stimulus check, you may end up getting less than you expected when requesting the 2020 Rebate Recover Credit on your tax returns.
Some last-minute tax filers may be getting more than one payment from that bill, called a plus-up.
If you don't normally file a tax return, the IRS recommends you do so for the 2020 tax year to ensure you get your third stimulus check, the upcoming child tax credit advance and other credits they may be due.
Tax refund delays
The agency is still processing tax returns from 2020 due to old technology systems and having to send staff home last March. So, if you are still waiting for your tax refund, it could be because the IRS is still catching up from last year.
A report from the U.S. Government Accountability Office (GAO), found the IRS still had millions of paper returns from last year that it had not yet processed.
IRS Free Tax Filing Options
The IRS provides free tax filing options for those who make under or over $72,000. Click HERE for more information.
WATCH MORE: New federal stimulus bill provides tax relief for unemployment benefits.
