Many will agree that 2020 has been a year of unique challenges but 2021 is just right around the corner! With that being said, below we discuss some things to keep in mind as we approach 2021 and the upcoming tax season.
Tax Day is Thursday April 15th, 2021
This is the date you must file you taxes before! Most can take the standard deduction which has increased from this year to $12,400 for single filers and $24,800 for married couples filing jointly. You may also itemize your deductions which is a little bit more painstaking, however is worth it if your itemized deductions exceed your standard deduction.
Stimulus Checks Aren’t Taxable
The CARES Act was instituted near the beginning of the COVID-19 pandemic and gave many citizens a onetime payment of $1200. These payments will not count as taxable income in the upcoming year which is great news for most tax payers! You can think of it as a kind of advanced refund you would have received as part of your 2021 tax refund.
Unemployment Income is Taxable
The pandemic has caused much of the country to shut down for extended periods of time, leaving many Americans jobless through no fault of their own. If you were one of the millions of Americans who received unemployment benefits in 2020, you have to pay taxes on that income. If you opted to defer taxes on your unemployment payments before you received them then you will need to save for the taxes that will be due when you file, or pay estimated quarterly taxes to stay ahead.
As always, consult your tax professional to get the most out of your taxes in 2021 and speak with someone who can help you in your specific financial situation. Mariela Ruiz, CPA, PLLC is here to help individuals and business owners in the Mission, TX community with their taxes and wishes you all a prosperous 2021!