Dread it. Run from it. Tax filing season arrives all the same. 2020 was a tumultuous year as the U.S. federal government and state governments across the nation worked to counteract the impact of the COVID-19 pandemic. Many of these efforts may impact your taxes. As such, the tax experts at ATAX Marble Hill are going to share some vital tax insights for filing your 2020 tax returns.
If you’re not sure how your taxes may have been impacted in 2020 as the result of stimulus bills, relief measures, and other changes, it’s wise to talk with a tax expert at ATAX Marble Hill. If you miss something, you could increase your liabilities, miss out on rebates and tax cuts, or otherwise run into trouble.
When it comes to federal taxes, make sure you read the fine print. The experts at ATAX Marble Hill note that standard deductions for 2020 increased by $200 for individuals and $400 for married couples, rising to $12,400 and $24,800 respectively. If your filing status is as a head of household, your standard deduction in 2020 will rise to $18,650.
Individuals will pay the same federal marginal tax rates for their 2020 taxes. However, income brackets have changed slightly. The government adjusted some brackets by a few hundred dollars to account for inflation. If you’re not sure how bracket adjustments might affect your taxes, contact a tax expert at ATAX Marble Hill.
Many businesses big and small received Paycheck Protection Program loans to help keep employees on their payroll. If you used the loans to keep employees on staff and to cover some other expenses, they are forgivable. Usually, this would count as taxable income but not with PPP loan forgiveness. The same is true if you received an Economic Impact Payment.
You may have also deferred the employer share of Social Security taxes starting on March 27, 2020. However, you will need to pay half of this by the end of 2021 and the other half by 2022. If you did defer taxes, it’s smart to chat with a tax expert at ATAX Marble Hill. Otherwise, you may run into issues later.
If you suffered a net operating loss in 2018 and 2019, you can carry that loss back for up to five years to offset taxable income. The CARES act also eases rules for deducting interest expense deductions. The rules are complex, so reach out to ATAX Marble Hill. The right tax advice may lower your tax liabilities this year and for years to come.
The tax experts at ATAX Marble Hill also note that the CARES Act and other policies may impact New York state taxes. New York has decoupled from some CARES Act provisions for net operating losses. The state also decoupled from personal income tax provisions. Given how complex the rules are, it’s wise to talk with a tax professional about your state taxes.