Answers To The Most Asked Tax Questions for 2020 Returns.
Numerous tax law changes affected 2020 tax returns, leading to confusion and misinformation on social media. Filing incorrect tax returns is a common issue, so we’ve put together answers to the most asked tax questions for 2020 returns.
Disclaimer: Taxes are complex, and one detail can change your outcome. Always consult a tax professional for personalized advice.
1. Do I Have To Pay Tax On The Stimulus Checks I Received?
No. Economic income payments (stimulus payments) are not considered taxable income.
2. Do I Have To Pay Back My Stimulus Payment If I Received Too Much? What If I Received Too Little?
No, there is no “grab back” provision. If you received too much, you will not have to pay it back. If your 2020 tax return shows you are eligible for a higher stimulus payment, you can claim the difference as a credit on your 2020 1040.
3. Can I Deduct Home-Office Expenses If I Worked From Home in 2020?
Employees who work for someone else cannot deduct home-office expenses, per the TCJA law. Business owners may be eligible if they meet the requirements of regular and exclusive use, and principal place of business.
4. Will The Tax Deadline Be Extended?
The IRS has not announced an extension of the April 15th deadline. Stay updated through official IRS announcements.
5. Will Taxes Increase Because Biden Won The Election?
No changes for the 2020 tax year. Future increases may occur, but no significant changes have been enacted as of now.
6. Are 2020 Retirement Distributions Tax-Free?
No, but the IRS offers relief if the distribution is COVID-related, including waiving the 10% penalty and spreading the tax over three years.
7. Is There A New Tax Credit For Traveling?
No. Despite rumors, there is no $4,000 travel tax credit for 2020.
8. What If My Business Lost Money In 2020?
The CARES Act allows businesses with a Net Operating Loss (NOL) for 2020 to carry it back five years. Be sure to file the necessary elections with your CPA.
9. Do I Have To Pay Tax On My PPP Loan Proceeds?
No, forgiven PPP loan proceeds are considered tax-exempt income.
For more detailed advice or to discuss your specific situation, contact us or book a consultation today. For related topics, check out our guide on tax planning strategies on our website.