7 Things That May Have Changed for Your Taxes in 2020
Victoria Bellafiore/Getty Images

April 15 is coming…and as of right now, the due date to file your 2020 taxes isn’t likely to change. But the pandemic—and its subsequent unemployment rates, stimulus relief packages, shifts to WFH or self-employment, etc.—have really thrown a wrench into the status quo. (Heck, we can’t even meet with our CPA in person this year.) That’s why we caught up with Lisa Greene-Lewis, TurboTax expert and CPA, to discuss the biggest changes to expect when filing your 2020 taxes, from virtual meetings to stimulus check check-ins.

1. Your Tax Appointment Will Likely Be Virtual

Many if not all CPAs are now offering tax services online, with TurboTax reporting a 70 percent increase in people using TurboTax Live. As for how this will change your appointment: You’ll likely need to scan and upload your tax documents to a secure portal ahead of your Zoom session, but otherwise it’s basically the same. (You know, besides having to have the old “wait you’re on mute” convo with Morty from H&R Block.)

2. You May Be Eligible for the Earned Income Tax Credit

The Earned Income Tax Credit is a tax break designed to support low- to moderate-income workers and families, and it’s basically available to anybody who saw a lower income this past year than in previous years and earns less than a certain threshold amount (for reference: $53,330 for a jointly-filing couple with two kids). Qualifying for it will either reduce what you owe or increase your refund. (For a family with three or more qualifying kids, that could mean getting up to $6,600 back, says Greene-Lewis.) Note that you have to have earned at least some income in 2020, and your eligibility is tied to either your 2019 or 2020 income—whatever is going to land you a bigger credit.  

3. You May Be Able to Claim a Higher Stimulus Payment

Stimulus payments are not taxable income, but if you didn’t receive the full amount that you’re eligible for, Green-Lewis instructs that you can claim more, in the form of the recovery rebate credit. See, the IRS based those initial payments on your 2019 income, but let’s say you lost your job or had a baby (a new dependent) in 2020. This is the IRS’s chance to reconcile those life changes, so you get the amount you’re owed. That said, if you’ve already received the maximum amount of 2020 stimulus, you cannot claim more, regardless of life changes. (One perk: if you accidentally got too much, you don’t have to pay it back, says Greene-Lewis.)

4. If You Take the Standard Deduction, You Can Still Write Off Charitable Donations

In previous years, if you chose the standard deduction when filing, you couldn’t claim any charitable donations. But for 2020, under the CARES Act, you can claim up to $300 in cash donations to a charitable cause. (If you itemize your tax return, you can’t take the $300 CARES Act deduction, but you can deduct up to 60 percent of your adjusted gross income for qualifying charitable donations.)

5. You May Have Additional Write-Offs If You Added a Side Hustle

To compensate for income loss during the pandemic, a lot of people picked up side gigs such as working for a food delivery platform or teaching remote courses. Greene-Lewis explains that for anyone newly supplementing their income with self-employment, there are tax implications and additional write-offs. For example, you can deduct mileage if you’re driving for a delivery service or any fees you paid to get activated as an employee on a platform like Instacart.

6. If You Lived in Two Different States, You May Have to Pay Taxes to Both

When the pandemic hit, many workers fled cities for more space and privacy. But if you had a physical address in two different places, you may be on the hook for taxes in both states, says Greene-Lewis. The IRS usually looks at two different factors for this, she explains. 1) If you lived in two different states for over 183 days and 2) Where you kept your personal belongings, where you registered to vote and where your DMV records say you live. That said, a lot of states have reciprocal agreements where they won’t double tax you. (Check here to find out if your situation applies.)

7. If You Got a PPP Loan, How You Spent It May Be Tax-Deductible

If you received a PPP (Paycheck Protection Program) loan back in the spring, it was not considered taxable income. (The goal was to help keep your business afloat during a difficult time—not to create an additional tax burden.) As of December—and the passing of the second stimulus bill—recipients got another boost: Any expense a small business owner had to cover with a PPP loan (rent, utilities, etc.) are officially tax-deductible. In other words, a PPP loan won’t affect your tax filing. 

RELATED: How Long Should You Keep Your Tax Returns? Your Paystubs? Your Car Purchase Paperwork?

From Around The Web