Get Ready to File Your 2020 Taxes
Most of us are more than happy to put 2020 in the rearview mirror. But you’re going to have to revisit it at least one more time when you file your taxes for last year. Believe it or not, the filing deadline is just over two months away, so it’s time to start giving it some thought. Here are some things to consider when filing your 2020 taxes.
It Might Take Longer
If you typically meet with an accountant or other tax professional in person to work on your taxes, you’ll likely be having these meetings virtually. This change could mean that it might take a little longer to exchange all the information and documents the tax preparer needs. If you haven’t made your appointment yet, don’t wait. Give them a call to start today.
There’s No Automatic Extension
If you’re thinking it can’t possibly be time to work on taxes because you just did them, you’re partially right. Last year, the government gave all Americans an automatic extension and pushed Tax Day back to July 15 as part of the initial coronavirus relief plan. So far this year that hasn’t happened and isn’t even being discussed, so it’s safe to assume you’ll need to file your 2020 taxes (or an extension) by Thursday, April 15.
You Might Have Additional Deductions
If you picked up a side job or freelance work to supplement your income in 2020, you may be able to take additional write-offs, such as mileage or training costs. But you will also need to declare the additional income if you earned more than $400, so be on the lookout for additional W-2s or 1099 forms. If you earned more than $400 but less than $600, the employer may not issue a 1099, but you still need to declare the income.
You May Owe Taxes in Two States
Many Americans found themselves living a nomadic life in 2020, from chasing jobs across the country to moving back home to save money or assist family members. As a result, they may owe taxes in two different states. If you lived in two different states and had a physical address in both, talk to a tax professional to find out about your state tax liability.
PPL Loans & Stimulus Shouldn’t Change Anything
If you received stimulus payments and/or a PPP (Paycheck Protection Plan) loan in 2020, don’t worry about them affecting your tax liability. Neither are considered taxable income, so they won’t make your tax bill any higher. Of course, if you have any questions about your taxes or don’t feel prepared to prepare them on your own, you’ll want to consult a tax pro or use trusted tax software to ensure you file correctly.
Don’t Forget the Recovery Rebate Credit
If you qualified for a stimulus payment and didn’t receive it, or you believe you received an incorrect amount, look for the Recovery Rebate Credit. It will be on line 30 of your 2020 Form 1040 or 1040-SR. You’ll list the difference between what you received and what you believe you are owed. This will either increase your refund or lower your tax liability.