The Coronavirus and Your Taxes

• The CARES Act provided up to $1,200 per eligible individual in the form of a stimulus payment. This does not count as taxable income. However, notify our office of the amount you received as this is mandatory information required by IRS guidelines.
• If you received funds from the Paycheck Protection Program (PPP) and are self-employed, please notify us of the amount received and the expenses attributed to the PPP.
• Many have received unemployment benefits due to the pandemic. This is taxable income. Please provide us with Form 1099-G stating the amount of unemployment and any withholding tax.
• If you received a refund of your 529 plan or ESA due to many schools transitioning to remote learning, this refund should have been returned to the original account within 60 days or used to cover other eligible educational expenses, or it becomes taxable income. You may also use up to $10,000 of your 529 Plan to pay up to $10,000 of student loan debt.
• The CARES Act allowed those under age 59 ½ to withdraw up to $100,000 from their 401K plans or IRAs before 12/31/2020 without the early withdrawal penalty. The withdrawal is taxable income.
• The Secure Act changed the age requirement of required minimum distributions (RMD) from retirement plans from 70 ½ to 72, if you turned 70 after 7/1/2019. The Secure Act allows owners of traditional IRAs to keep contributing past age 70 ½ effective 1/1/2020. In addition, the CARES Act allowed these individuals to skip their RMD in 2020, penalty-free.
• The standard deduction increased to $12,200 single/$24,400 married.
• If you do not itemize, you are allowed to deduct up to $300 in charitable donations. Please include your total charitable donations made in 2020.
• Many have worked remotely due to the pandemic. However, you are not allowed to deduct the home office expense if you are an employee. You are allowed to deduct the home office expense only if self-employed and filing as a sole proprietor.