As the year comes to an end, I have compiled some things to think about for your 2020 taxes.
For 2020, you can deduct up to $300 in Charitable contributions if you take the standard deduction. This does not include goods that you donated (clothing, toys, household goods, etc…) but only donations of money to qualified charitable organizations. If you itemize, the normal limitations apply.
Remember, if you received Unemployment benefits, it is considered taxable income. Some states, such as Maryland, no longer mail the 1099-G to most taxpayers. You may need to download your form from the Maryland website after the first of the year – https://interactive.marylandtaxes.gov/Individuals/paperless/1099g/default.asp. They may not be ready until February 1st.
Starting in 2020, the list of medical expenses you can use with funds from your FSA, HSA, MSA, or HRA now include over-the-counter medications and menstrual products. Although you can use your pre-tax plan funds for these items, the list of medical expenses deducted on your Schedule A has not changed and does not include these items.
The Economic Impact Payment (EIP or more commonly referred to as the Stimulus Check) is not included in taxable income. But you must report the amount you received on your 2020 income tax return to ensure you received the total credit you are entitled to. Form 1444 (the letter you received from the president) states how much you received. This is important for families whose income was too high in 2019 and did not qualify but are within the limits for 2020. Also affected are individuals who had a new baby in 2020. If you were overpaid because your income was too high in 2020, you do not have to pay this amount back. The only overpayments that need to be returned to IRS are for those for deceased taxpayers – https://www.irs.gov/newsroom/returning-an-economic-impact-payment
Although many Energy Efficient Improvement credits expired in 2018, some were extended through 2020. If you purchased energy-efficient products, make sure you have your receipts handy!
Beginning with taxes for 2020, you can now request an IP PIN (Identity Protection PIN). It is highly recommended that everyone get one. In early-mid January, the IRS website – https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin – will reopen the application process. You will need to request a new IP PIN every year. This ensures that no one else can file a tax return electronically using your information without this IP PIN. Once you receive your IP PIN, be sure to keep it with your tax paperwork because you will not be able to file your own return electronically without it.
There are a slew of changes and these are only a few. I highly recommend seeking professional help in preparing your tax returns to ensure a more accurate tax return.
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