Hate April 15, tax day? Well, this year you’re in luck. To cope with all the changes that COVID- 19 brought, including a delayed due date last year, stimulus checks, and an enormous backlog, the IRS has changed its filing deadline. For the 2020 tax year, your deadline is now May 17, 2020.
And that’s not all.
Were you due a stimulus check but never received it? You can claim the missing stimulus money on your 2020 tax return in the form of a tax credit. Tax credits reduce your taxes, dollar for dollar, and can even produce a refund.
You did receive a stimulus check? That money is not taxable. It is not considered income and is not used to consider eligibility for federal benefits or assistance programs.
Did you receive unemployment? Yes, your jobless benefits are taxable – but fortunately, up to $10,200 of 2020 unemployment benefits is exempt from federal income tax for households with an adjusted gross income under $150,000. Married couples who got unemployment payments
can each exclude $10,200 of unemployment benefits.
Are you 65 or older? Enjoy a bigger standard deduction. Married taxpayers born before Jan. 2, 1956, whether filing jointly or separately, get an extra $1,300 apiece added to their standard deductions. The additional standard deduction is $1,650 for singles and heads of households. You are also eligible for the same additional standard deduction amounts if you are blind and younger than 65. If you are over 65 and blind, the amounts double.
Taxpayers age 65-plus also enjoy their own tax returns. Calculating the bigger standard deduction is made easier with Form 1040-SR, “U.S. Tax Return for Seniors.” The special tax return for those 65 and older includes a simple-to-use standard deduction chart at the bottom of the form that shows the amount of the bigger standard deduction based on your filing status and how many boxes you check for age and blindness.
The 7.5% threshold for medical deductions is now permanent. If you itemize deductions, you can continue to deduct medical expenses above 7.5% of your adjusted gross income. There are lots of expenses you can deduct aside from the usual out-of-pocket fees you pay to doctors and
dentists. You can deduct the costs of nursing home care, for example, provided that medical services are the main reason for being in the nursing home. You can also deduct acupuncture sessions, smoking cessation programs, false teeth, and some insurance premiums.
Giving is good. Even if you take the standard deduction, you are allowed to deduct up to $300 in cash donations made to charities directly on your 1040. The limit is per “tax unit,” which means you can only deduct $300, no matter whether you’re filing a joint return or a single return.
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Mind your Social Security payroll taxes. If you are still working and your employer chose to defer collection of your portion of Social Security taxes between Sept. 1 and Dec. 31, 2020, you will need to repay those deferred taxes. You have until the end of 2021 to repay those taxes before penalties and interest start to accrue.