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Here are some notable ways the latest technology can save huge amounts of time, money, and headaches when it comes to pandemic year taxes.
USA TODAY
April second isn’t that big for the second year in a row.
Federal and state officials have again postponed income tax filing deadlines this year to give applicants, preparers, and government employees more time to adjust to new rules that respond to the COVID-19 pandemic. It is important, however, that these delays do not apply to every tax advisor. Therefore, taxpayers need to keep abreast of the details of the new rules.
In addition to the adjusted deadlines, applicants need to be aware of the benefits that the federal government has created this year to save money. Some are one-off adjustments in response to the pandemic, giving filters the rare chance to save a little more.
To answer the most important question first, if not this Thursday April 15th, when do you have to submit?
For most people filing individual income tax returns, the federal deadline is now May 17th. For state income taxes, the Iowa Department of the Treasury has moved the April 30th to June 1st.
As always, filers can request an extension. Ying Sa, founder of Community CPA, a tax and accounting service from Des Moines, said applicants would then have to submit their filing by October 15.
However, an extension does not provide more time to actually pay income taxes. The redress is only there to help people resolve paperwork issues and they may still owe penalties and interest on payments that were not sent within the original filing deadline.
You can find further tax questions and answers here:
Do I have to pay income tax on my stimulus check?
No, the money is tax-free.
Can my income taxes help me get stimulus money retrospectively?
Yes. The federal government provided a stimulus payment of up to $ 1,200 per person (excluding additional funding for parents) last spring, followed by up to $ 600 per person in January.
However, Congress limited who could receive the incentive. Individuals had to make $ 75,000 or less per year to get the full benefit. Married couples had to earn $ 150,000 a year or less.
To determine who qualifies, the Internal Revenue Service examined the income tax returns that workers filed in 2019 and 2020 for the previous year. Some workers missed it because they made too much money over those years, even though their incomes have shrunk during the pandemic.
If the income tax returns they file this year show they made less than the $ 75,000 per person or $ 150,000 per couple in 2020, they can get the full prior economic stimulus payments in the form of a tax credit.
More: Iowa is not on track to trigger automatic income tax cuts in 2023, the State Panel says
Workers could face a similar problem as the recent $ 1,400 stimulus exams were issued as of March. But they need to address this issue when they file an application next year, said Nate Beck, a chartered accountant at McGowen Hurst Clark Smith.
What do I need to know about taxes on unemployment insurance benefits?
The federal and state governments grant an exemption from the first $ 10,200 in unemployment insurance benefits.
This exemption applies to employees with an annual household income of $ 150,000 or less. The benefit cannot be split between married couples.
More: Iowans who have already filed tax returns do not need to change them to benefit from unemployment exemption
For example, if a husband received $ 15,000 in unemployment benefits and a wife received $ 5,000 in 2020, the government exempts the first $ 10,200 of the husband’s benefits and all of the $ 5,000 of the wife’s benefits. The husband cannot transfer part of his benefits to the wife in order to reduce the joint income tax.
The $ 10,200 exemption applies regardless of the type of unemployment insurance an employee has received.
I am self-employed, but had to take time off because of the pandemic. Are there any tax benefits for me?
Yes. The federal government has created tax credits for sick leave and family leave in connection with the COVID-19 pandemic. To receive the benefit, workers must complete IRS Form 7202.
The sick leave tax credit provides benefits for up to 10 working days. Self-employed can get it if they:
- Was diagnosed with COVID-19.
- Felt symptoms of the coronavirus and sought a diagnosis.
- Had to stay home due to local, state, or federal restrictions.
- I stayed home on the advice of a health care provider.
Divide your total annual income by 260 to find the sick day tax credit. Then multiply that number, which is considered your average daily income, by the number of sick days you have taken. The federal government limits the total utility to $ 511.
The family vacation tax credit can be more generous. This applies to self-employed people who had to take a break because:
- Children’s school closed.
- The normal child carer was no longer available.
The family vacation tax credit is 67% of average daily earnings and is capped at $ 200 per day. Employees can take advantage of this benefit from April 1, 2020 for up to 50 days in the past year.
Will I be punished if I withdraw money from my retirement account to make ends meet?
Not this year.
Usually, withdrawing funds from tax deferred savings accounts before the age of 60 incurs a 10% penalty on top of an individual’s claimed income.
However, under the COVID-19 relief package passed in March 2020, people were able to withdraw up to $ 100,000 collectively from their 401 (k), 403 (b), or traditional individual retirement accounts – with no penalty.
The exemption applies as long as individuals withdrew funds before December 30, 2020.
Can I take a break from my home office upgrades?
Probably not. As part of an amendment to the tax law of 2019, the federal government removed the deductions for home office for any income taxes by 2025.
“Employees who receive a paycheck or W-2 solely from an employer are not eligible for the deduction even if they are currently working from home,” the IRS wrote.
Self-employed and independent contractors can still receive deductions.
What benefit can I get for charitable contributions in 2020?
Beck, the CPA, said the federal government had offered to give filers an additional allowance when they donate to charity.
Applicants are entitled to a deduction of up to $ 300 from their income tax this year, in addition to the standard deductions of $ 12,400 for individuals and $ 24,800 for married couples.
Do I have to pay tax on the COVID-19 incentive I received for my business?
It depends on.
Eligible loans under the Federal Paycheck Protection Program are tax-free, as are US Small Business Administration grants for disaster losses.
But Sa, the community’s CPA founder, said the federal and state governments are treating Iowa’s COVID-19 relief grants differently.
When businesses receive funding through programs such as the Iowa Economic Development Authority’s small business grants or bar and restaurant aid programs, they do not have to pay income taxes to the state. However, the federal government is still taxing these funds, Sa said.
“The best advice we can give to the public is not to take it,” she said. “Ask the question so the tax professionals can investigate and give you the answer.”
Can I wait until May 17th to submit quarterly estimates?
Individuals making estimated quarterly payments – often self-employed – still have to submit an application by April 15th. On the state side, Iowa Treasury spokesman John Fuller said in an email that the agency had pushed back the deadline for making these payments June 1.
Beck said he feared self-employed people might be confused. Usually they submit their quarterly estimates and federal income taxes at the same time.
More: The tax deadline has been extended, but you can still owe money until April 15th
Beck said a bill in Congress could delay the federal government’s quarterly estimation deadline. But at this point, he said, a delay would be late because many workers are already filing and accountants are cracking numbers. Self employed should plan to submit by Thursday.
“It can still happen,” said Beck. “But it doesn’t really help people in my job. It’s not like we wait until the last day to do all of these calculations.”
What about corporate taxes? Can they be submitted later?
No delays this year.
At the federal level, S-companies and partnerships must be submitted by March 15. C companies must submit by Thursday.
The Iowa Department of the Treasury has also not postponed any corporate or partnership tax deadlines. These are due on April 30th.
Tyler Jett covers jobs and economics for the Des Moines Register. Reach him at tjett@registermedia.com, 515-284-8215, or on Twitter at @LetsJett.
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