Bucks & Montgomery County PA: Tax Time is Here !!!

By
Services for Real Estate Pros with Trusted Tax Resolution

I represent taxpayers who have IRS issues in Bucks and Montgomery county PA.

2021 Tax Season starts Feb. 12th

The Internal Revenue Service announced that the nation's tax season will start on Friday, Feb. 12, 2021, when the tax agency will begin accepting and processing 2020 tax year returns.

The Feb. 12 start date for individual tax return filers allows the IRS time to do additional programming and testing of IRS systems following the Dec. 27 tax law changes that provided a second round of Economic Impact Payments and other benefits.

Most people with gross income of $12,400 or more must file a federal tax return.

File Electronically with Direct Deposit

The IRS strongly encourages people to file electronically and choose direct deposit to avoid pandemic-related paper delays. The safest, most accurate and fastest way to get a refund is to electronically file and choose direct deposit.

Pandemic-related tax topics
Here are a few important things for taxpayers to know this year.

Some individuals may qualify for the recovery rebate credit
Most people who are eligible have already received the full amount for the recovery rebate credit as Economic Impact Payments. Some people may be eligible to claim the recovery rebate credit if they didn't get Economic Impact Payments or received less than they were entitled. People must file a tax return to claim the recovery rebate credit even if they aren’t normally required to file.  The maximum Economic Impact Payments for qualifying individuals were:

    • $1,200 per person and $500 per qualifying child for the first payment
    • $600 per person and $600 per qualifying child for the second payment 

Taxable unemployment compensation
Millions of Americans received unemployment compensation in 2020, many of them for the first time. This compensation is taxable and must be included as gross income on their tax return.

Interest is taxable income
Many individual taxpayers who received a refund on their 2019 tax returns also received interest from the IRS. The interest payments were largely the result of the postponed filing deadline of July 15 due to the COVID-19 pandemic.

The 2019 refund interest payments are taxable, and taxpayers must report the interest on their 2020 federal income tax return.

The IRS will send a Form 1099-INT to anyone who receives interest totaling at least $10. The average refund interest amount is $18, but the amount for each taxpayer varies based on the tax refund that the taxpayer received. Form 1099-INT will be issued no later than Feb. 1, 2021.

Home office deduction 
The home office deduction is available to qualifying self-employed taxpayers, independent contractors and those working in the gig economy.

However, the Tax Cuts and Jobs Act suspended the business-use-of-home deduction from 2018 through 2025 for employees. Employees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home. IRS Publication 587, Business Use of Your Home, provides more on the home office deduction.

Workers moving into the gig economy
Many people found different employment in 2020, including jobs in the gig economy. Taxpayers must report income earned in the gig economy on their tax return. However, gig-economy workers generally do not have taxes withheld from their pay as salaried workers normally do. The IRS encourages people earning income in the gig economy to consider making quarterly estimated tax payments to stay current with their federal tax obligations.

Charitable donation deduction for people who don’t itemize
Individuals who take the standard deduction generally cannot claim a deduction for their charitable contributions. However, the CARES Act permits these individuals to claim a limited deduction on their 2020 federal income tax returns for cash contributions made to certain qualifying charitable organizations and still claim the standard deduction. Nearly nine in 10 taxpayers now take the standard deduction and could potentially qualify.

Under this change, individuals can claim a deduction of up to $300 for cash contributions made to qualifying charities during 2020. This deduction does not apply to donated property. The maximum deduction is $150 for married individuals filing separate returns.

That's a lot of changes for Tax Year 2020. If you or someone you know has a tax issue or if you simply have any questions related to this year's filing season, please do not hesitate to contact me at 215-316-3437 or steve@trustedtaxresolution.com.

Steven Buonomo CPA

Trusted Tax Resolution 

1016 Mill Creek Road

Feasterville, PA 19053

215-316-3437

steve@trustedtaxresolution.com

 

 

Comments (1)

CANDACE (Candy) STEVENS, EA
Number Cruncher LLC - Overton, NV
Helping Taxpayers Resolve IRS problems

Great information.  Thank you for sharing.  This tax season is turning into a headache, and it hasn't even started yet!

Feb 04, 2021 05:31 PM