As you begin preparing your tax return for 2020, here’s a snapshot of what you’ll need to know.
Standard Deductions Increased Slightly
The deadline to pay taxes is April 15 or request an extension.
Last day to file a tax return if you received an extension from the IRS.
Retirement Tax Restrictions Ease Up
Qualified individuals who had to tap into retirement accounts early in 2020 because of the COVID-19 pandemic are getting a break.
- More time to pay back early withdrawals without being taxed.
- No income tax on money borrowed from 401(k) if paid in five years.
- 10% penalty waived for early IRA and 401(k) withdrawals.
No Tax on Stimulus Checks
The payment many Americans received in 2020 under The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) — $1,200 for singles, $2,400 for couples filing jointly — was an advance distribution of a 2020 tax credit and will not be taxed.
Individual contributions are unchanged for 401(k)s and Individual Retirement Accounts (IRAs).
Save Time with a Tax Pro
Hiring a tax pro could make a lot of sense depending on your situation. Here are a few instances when you might consider going pro.
You Have a Lot on Your Plate
You Hold Multiple Jobs
You Recently Purchased a Home
You Have a Large Investment Portfolio