Have you filed your taxes yet?
If not, don't sweat it just yet. You still have time. Actually, more time than you'd normally get.
Having said that, this is the time of year when many people start stressing out about filing their taxes. On top of the regular stress-inducing tax-season triggers, this year offers added confusion about how the COVID pandemic will affect your taxes.
This article focuses on changes to be aware of when filing your taxes in the midst of the COVID pandemic.
1) New Deadline to File Your Federal Taxes
Normally, the deadline to file taxes is April 15th. Due to interruptions related to the COVID pandemic, however, the deadline to file federal taxes this year has been pushed back to May 17th.
If you need even more time to file, you can extend the deadline out to October 15th by filling out and submitting form 4868.
It is important to note that the May 17th deadline does not apply to those who have estimated tax payments due on April 15th.
What about state taxes?
The deadlines mentioned above are for federal taxes only. It is important to verify your state’s tax deadline. Deadlines have been changing for the last several weeks as states rush to extend them, and the deadlines to file state taxes will vary from state to state.
Here is a site we've been using to track the changes for state deadlines.
If you live in Oklahoma, Texas, or Louisiana and were affected by the winter ice storms in February, the federal deadline has been extended to June 15th, 2021
2) Stimulus Payments
Three rounds of government stimulus payments went out over the past year due to the COVID pandemic. If you received a stimulus payment, those payments are tax-free.
If you were not eligible to receive a stimulus check, you may still qualify for payment. When filing your taxes for the 2020 tax year, if you earned less than $75,000 filing as single, $112,500 filing as head of household, or $150,000 filing as a married couple in 2020 and did not receive a stimulus payment, you can claim the refundable recovery rebate credit on your federal tax return.
3) Working from Home During the Pandemic
You may be wondering whether you can deduct business-related expenses if you have been working from home. Unfortunately for most of us, the answer is no. If you are an employee of a company, you can not deduct business-related expenses such as computer-related equipment or utilities used for a home office, on your tax return. These types of deductions have been suspended until 2025 based on current legislation. However, if you are self-employed, you can still deduct business-related expenses.
4) Unemployment Benefits
Unemployment benefits are considered taxable income. For this tax year though, if your modified adjusted gross income (AGI) is less than $150,000 then the first $10,200 of unemployment benefits you received is not taxable. Amounts above that first $10,200 are taxable.
5) Pandemic Related Tax Benefits
Earned Income Tax Credit
There are changes to the earned income tax credit to help families making less than $56,844. The eligibility varies based on how many children you have, as well as your tax filing status. This credit is worth anywhere between $538 to $6,660.
For more info on eligibility and tax credits available through the IRS website, click here.
Small Business Owners
Small business owners who utilized the Paycheck Protection Program (PPP) to pay for business-related expenses have several added benefits, in addition to the loans being forgiven. These business relief loans are tax-free. You can also still claim those expenses on your federal tax return against your revenue, as you would during a regular tax year.
Student-Related Tax Benefits
Federal student loans have been deferred till September 30th, 2021. That means that no payments are required, and your interest does not accrue during this time.
If you received an emergency financial aid grant related to the pandemic, you might still be able to claim the learning tax credit as well as not having to include the aid as part of your gross income calculation.
In order to get this out quickly, I briefly covered what I consider to be the major tax changes this year related to the pandemic. If you would like to discuss any additional tax-related changes, please leave a comment below. Thank you!