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- There were three stimulus relief packages passed
over the last year and a half.
You gotta wonder,
what the heck do I need to know for my 2020 tax return?
So, consider this your ultimate guide,
all the things you need to know for 2020.
Lisa Greene-Lewis, CPA, TurboTax expert here with us.
Lisa, let's just bullet through these
so that people remember.
The first and the biggest, right?
The stimulus checks.
What do I need to know?
- The first thing you need to know is stimulus checks
are not taxable on your 2020 taxes.
And if you received too much, you don't have to pay it back.
But if you didn't receive enough or didn't receive it at all
for the first and second round of stimulus,
you can claim a recovery rebate credit
and recoup that stimulus that you didn't get.
Also related to that, if you had a baby in 2020,
there was no way that the IRS knew that
when they issued those checks,
so you can claim a recovery rebate credit
and get that stimulus for your baby.
- Pretty cool, right?
We talked about unemployment benefits in other videos,
but let's talk about them here.
People got the extension, people on unemployment,
what do they need to know?
Yes, so if you did receive unemployment,
typically it is taxable, but there was retroactive relief
with the American Rescue Plan.
So, your first 10,200 will be tax-free if you're single.
If you're married, filing jointly,
that amount goes up to 20,400 will be tax-free
if you make up to $150,000.
- Yeah, good stuff.
And definitely check out our previous videos
on unemployment benefits.
If you worked from home all year, which most of us did,
good luck trying to get that home office deduction, right?
Especially if you have another office somewhere
in some building.
- Yeah, so, you know, a lot of people have this question.
If you're an employee,
unfortunately you cannot claim your home expenses.
If you're self-employed, you can claim your home expenses.
You can claim the home office deduction.
So on a federal level, I should say,
employees cannot claim that.
Now, there are some States that do allow you to claim
the under-reimbursed employee expenses on your state taxes.
So, they conform to the pre-tax reform law.
- All right, so, check your states, that's important.
Two big things.
Your retirement, you were able to withdraw $100,000
from your IRA.
What's the taxability there?
And of course, the earned income tax credit,
it's a ton of families, so tell us about those.
- Yes, so if you made a coronavirus-related withdraw
from your retirement, so that's your IRA or 401k,
there was some relief there.
First of all,
if you took the distribution before you were 59 and a half,
you will not get the additional 10% tax penalty
that's usually in place.
And then also, usually when you take a distribution,
you have to recognize that entire distribution
in your income in the tax year.
They are allowing you to spread that out over three years.
So for example, if you took out $30,000,
usually you would have to recognize that entire $30,000
in your taxable income.
With this provision, it would be 10,000 per year.
So, it's lowering your tax liability.
And then regarding the provision that passed
for earned income tax credit,
it's a huge provision for people
because that credit is up to $6,660
for a family with three kids.
This provision allows people to use their 2019 income
if it helps them get more earned income tax credit.
- Yeah, that's so fantastic.
We had mentioned before in a previous video
that if you take the standard deduction,
you still get $300 above the line
of charitable contributions, which is amazing.
And finally, tell us about the PPP loans
and what people need to know
about those tax implications too.
- Yes, so the PPP loans, a lot of people are wondering
if the loan amount that they get is taxable as income.
That is not taxable because you're paying a loan,
paying the loan back.
And then there are also people that have the loans forgiven.
Usually when you have a loan forgiven,
that amount that's forgiven, you are taxed on that,
but under the various provisions that passed,
they are not making that debt that's forgiven taxable.
So, that will be tax free as well
as long as you use the funds
for expenses that were required to be used.
So like, if you were self-employed,
to pay for your wages, to pay for your rent,
or your supplies,
you will not be required to include that in your income.
- Lisa, there's so much new for 2020,
where does a taxpayer go for help?
- The TurboTax has proactive guidance related
to the events that occurred in 2020,
But if you have questions, you could connect live
via one-way video to a TurboTax live tax expert
that can either guide you along the way,
or new this year, you can fully hand over your taxes
to them all from the comfort of your home.
- Lisa Greene-Lewis, CPA, TurboTax expert.
Thank you for going through all of it with us.
- Thank you.