MADISON (WKOW) – Millions of Americans have seen some pretty dramatic changes in the past year thanks to the COVID-19 pandemic. Many of these changes are likely to be reflected in your 2020 tax return.
Tylor Cat is the CPA at Beckett Tax in Madison, Wisconsin, and says all these changes have kept him and other tax professionals busy.
"I feel pretty trapped," he said. "But I mean, there are so many changes over the year that we can only advise on what information we have at that point in time. Since the changes are constant, I have to keep up to date."
Here are some changes to watch out for this season.
Thanks to the CARES Act, cash donations to charitable organizations in 2020 can be deducted without listing. If you take a standard deduction, tax professionals can deduct up to $ 300. For a couple, it's $ 600.
If you collected an unemployment check in 2020, this is for you. Unemployment is taxed at the federal level and often at the state level. Cat says if you didn't withhold any taxes from your unemployment, expect a smaller refund. If you can, he recommends withholding state and federal taxes from now on, especially if you are expecting that refund. How much is withheld depends on which tax bracket you are in and what your income is.
If you haven't received either or both of your stimulus checks, you can claim them on your taxes. Find out how much you owe and fill out the appropriate 10-40 form. The amount should be included in your tax return. The federal legislature is still working on another auxiliary law that could include a further stimulus test. The check amount is based on your most recent tax return. So if you made more money in 2020 than you did in 2019, this may change how much stimulus money you get. Experts say if you can wait for the submission it might help.
Stimulus checks are not taxed.
TO WORK FROM HOME
Millions of Americans started working from home in 2020, but most people cannot deduct any expenses they have incurred while working at home. Dan O’Brien, an accounting professor at Madison College, says the IRS has pretty strict rules about this. If a room is not set up exclusively for an office and is not otherwise used, it is likely that it cannot be withdrawn. The self-employed are likely to be able to deduct their work from household expenses.
WITHDRAWAL FROM IRA
According to our subsidiary at Eau Claire, if you've taken money out of your IRA to pay for pandemic-related expenses, you can only claim a third of that money this year and for the next two so it doesn't affect your tax bracket too harshly .
O'Brien says if you are expecting your tax refund, which averages about $ 2,500 per person, you should file it quickly so you can receive it. So far, it seems the IRS is ready to reimburse taxpayers in a timely manner and there shouldn't be any major delays in receiving this money once you file it.
If filing is easy this year, Cat says it's probably okay to use a program like Turbo Tax. However, when you've got a little more involved, it might be best to seek help from a professional to make sure you're getting the most of your return.
Katzen recommends paying attention to recent tax law changes, as well as some of the credits that are new or already available to people. One of his clients is getting a few thousand more dollars back on his tax return for using the loans he qualified for.
"If you don't keep up, you might be missing out," he said.
If you are confused, experts say that you should turn to someone for clarification.
For more information, please visit the IRS website by clicking here.