There are many changes to the 2020 tax laws. A few of them include:
1) If you did not receive your Economic Impact Payment (stimulus money) there is a place on the tax return to recover that amount of money for which you qualify. Any child born in 2020 is eligible for the credit, as well.
2) If you do not itemize but make charitable contributions, there is now a form to claim those gifts.
3) Medical expenses has been expanded to include OTC medications without a prescription such as pain and allergy medication and the cost of menstrual care products. Receipts much be retained to claim these expenses. These are expenses not reimbursed by HSA, MSA, FSA & HRA.
4) There is no Required Minimum Distribution for IRAs for the year 2020. If you have be affected by COVID-19, you may take distributions from IRAs up to $100,000 without the 10% penalty. The repayment term has been increased to 6 years (instead of 5). Required Minimum Distribution age has been extended from 70-1/2 to 72.
5) ACA insurance (form 1095-A) must still be reported on the tax return.
6) The 1099-MISC form will no longer be used to report non-employee compensation income. The new form will be called 1099-NEC. That will be the only type of income reported on that form.
7) For those who received unemployment compensation in 2020, you will be receiving form 1099-G. That compensation is taxable income and must be reported. Please look for those forms in your mail in January 2021.
8) The penalty for failure to file a tax return has also been increased from $205 or 100% of the tax owed to $435 or 100% of the tax owed. Failure to file is calculated at 60 days after the filing deadline. That is why it is so important to file your taxes on time!
9) College 529 accounts may now be used for apprenticeship expenses, helping to fill a need for the trades in our country. They may also be used to pay off student loans, up to $10,000 per year.
I will be receiving my 2020 tax year program in mid-November. If you have any questions or concerns, please call me or schedule an appointment to see me and we can discuss your tax liability for 2020, due April 15, 2021.