A new year means tax time is just around the corner.
With two stimulus packages, last year’s deadline extension, many working from home and children learning remotely, taxpayers may be wondering what effects that will have when filing in 2021.
Here are five things to know about taxes in a pandemic:
- Stimulus checks are not considered taxable income, but rather a credit or rebate on taxes that were going to be paid. There will be an income calculation when filing the 2020 return that will rectify the difference.
- Unfortunately, W-2 employees who worked from home cannot write off expenses such as office equipment, internet service or other utilities. The ability to claim those expenses was eliminated in the Tax Cuts and Jobs Act which overhauled the tax code and was signed into law in December 2017.
- Unemployment benefits are taxable, even if they were due to COVID-19, on both the state and federal levels.
- Despite the fact that many find themselves “homeschooling,” there are no federal tax breaks for homeschooling expenses. While some states do offer such tax breaks, Virginia is not among them.
- Last year tax deadlines were extended due to the pandemic. So far there are no plans to extend deadlines this year, however, with new leadership and the prospect of another stimulus package in the works, that could be subject to change.
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