SACRAMENTO, Calif. — Taxpayers may have been relieved to find out the tax filing deadline was extended from April 15 to May 17. That gives those planning to file more breathing time to get their 2020 income taxes organized. Here's a guide that breaks down everything you need to know before and after you file.
Answers to your burning 2020 taxes questions from everything about tips before you file, to when you’ll receive your refund.
Tax write-off tips
A local tax expert explains if you withdrew money from their retirement, you don't have to pay the 10% tax penalty. You may also be able to write off some expenses if you worked from home during the pandemic.
If you have been working home during the pandemic, you may be wondering if you could write off some of your home expenses. If you’re self-employed then yes, but the ability to write off home office expenses went away in 2018 for most W2 employees.
The IRS said educators who purchased protective items for COVID-19 and have not been reimbursed can write them off on their taxes with a limit of $250.
Initially, unemployment benefits were considered taxable income. Fast forward to The American Rescue Plan Act, which includes a provision that makes the first $10,200 in unemployment benefits nontaxable. That means you won't pay taxes on unemployment income. The IRS released information on what this means for you.
How stimulus payments can affect your return
How unemployment and stimulus payments affect taxes and tips on getting ready to file.
While most Americans have received their stimulus checks already, some might wonder why their payment was less or more than what they were expecting. Filing your taxes early or late this year can change the amount of your future stimulus check if your income changed from 2019 to 2020.
Here are some common questions and answers about how stimulus payments affect filing your taxes.
If you did not receive the first or second stimulus, or received less than you were eligible for, Line 30 on your return is where you will find the Recovery Rebate Credit to claim your payment.
Typically, borrowers have to pay a 10% tax penalty if they pull from their 401(k) plans before retirement age. However, the CARES Act waved that penalty in 2020 as long as the withdrawal was coronavirus-related. Talk to your tax professional about your options if you had to tap into your 401(k).
Tax refund delays
The agency is still processing tax returns from 2020 due to old technology systems and having to send staff home last March. So, if you are still waiting for your tax refund, it could be because the IRS is still catching up from last year.
A report from the U.S. Government Accountability Office (GAO), found the IRS still had millions of paper returns from last year that it had not yet processed.
WATCH MORE: New federal stimulus bill provides tax relief for unemployment benefits.