How do recent tax changes affect my 2020 taxes?
Some of the new tax change highlights include:
- Economic Impact Payment (EIP) (also known as stimulus payments) can be claimed on your 2020 tax return if you haven't already received the full amount of the payment for the first and second amounts.
If you didn't receive the full amount of the third payment, you can claim the rest on your 2021 tax return.
- Unemployment benefits up to $10,200 aren't taxable.
- You no longer need to repay excess advance payments of the Premium Tax Credit
- You can take up to a $300 deduction for charitable cash contributions when taking the Standard Deduction.
- RMD penalties are waived for 2020.
- There is no longer an age limit on who can make regular contributions to IRAs.
- The IRS now allows e-filing amended tax returns.
If you have a business, there are multiple credits, loans, and payroll deferrals that you may have already taken advantage of during the pandemic or that you can claim on your return.
Also, if you received unemployment compensation, make sure to report that on your tax return even if it's no longer taxable income for 2020. Not all states mail Form 1099-G
showing the payments. You may have to check their website for that information if you received unemployment compensation.