2020 COVID-Related Tax FAQs
If you’re like me, you’re in the throes of gathering documents to file your 2020 tax return. If so, here are some FAQs to note, especially after the crazy year we had.
Q: Will I owe taxes on my stimulus payment(s)?
A: If you received a stimulus payment during 2020, you’ll be happy to hear those payments aren’t taxable.
Q: Is the money I received from unemployment payments taxable?
A: While stimulus checks aren't taxable, unemployment benefits are. You won’t pay Social Security and Medicare taxes, but you will pay income tax. This applies both to standard unemployment benefits and the weekly enhanced benefits of 2020.
Q: Are there any deductions for working from home, homeschooling, or taking care of my kids?
A: Unfortunately, no. There are no special deductions for items you bought for yourself or your kids when your boss sent you home or your child’s school shutdown. Standard deductions are available for people who work from home in a normal situation—just not as a result of a worldwide pandemic.
Q: I’m a teacher. Are there any notable credits or deductions for me?
A: Yes! Teachers and other educators can deduct up to $250 of out-of-pocket expenses for personal protective equipment (PPE) and other items to prevent the spread of COVID-19 in the classroom. Items need to have been purchased after March 12, 2020.
Q: I’m a business owner and took out a PPP business loan. What do I need to know?
A: In December 2020, the IRS stated any eligible expenses paid with money from PPP loans could be deducted from your taxable income—definitely good news for small business owners!
You know our thing is insurance, not taxes, so keep in mind this material is for informational purposes only and in no way intended to provide tax advice. If you have questions about insurance or how it may affect your 2021 goals and plans, please give me a call. I’m here to help however I can.