2020 has been a difficult year for everyone. We’ve been promised a better year in 2021 and I think we’re all waiting for that to happen.
Congress did things to attempt to help us, but there are some important things to consider regarding these bills:
- You will need to know how much, if any stimulus money you received. It isn’t taxable, but you still need to report it on your returns. At this point, it appears that any second round stimulus money received will be reported on your 2020 returns, along with the first one.
- Unemployment benefits are taxable, so anyone who received them and didn’t have tax withheld should remember that your tax bill may be higher this year.
- The latest bill signed into law on 12/27/2020 changed the existing law and made any business expenses that may be forgiven with the PPP loan deductible, but you should still keep track of the expenses used by those loans for forgiveness purposes.
- For anyone who had their employee portion of the OASDI payroll tax deferred at the end of 2020 or for employers who deferred it, remember that it will need to be repaid through 2021.
- This one isn’t a change from previous years, but right now, at the beginning of the year is a good time to document your vehicle odometer reading if you will be deducting your mileage for business, charity, or medical driving. The IRS would like to see something from an outside source, like a reading from a vehicle maintenance business, but a picture of your odometer would certainly help.
There is a long list of smaller changes made to the tax code in 2020, but these are the ones that need to be considered for the bulk of taxpayers. Please contact us if you have any tax questions specific to your situation.
Westerville Tax Services