COVID-19 and Taxes: What the Pandemic Means for Your Returns

SALT LAKE CITY – It’s that time again. On Friday, the IRS began accepting tax returns for 2020.

Filing taxes can be a daunting task any year. But 2020 – along with a global pandemic, social unrest, and bloody election season – brought in a ton of federal money to prop up businesses and individuals during an economic recession. With all these stimulus checks and credits, Utahns could now ask: What does this mean for my return?

To answer these and many other questions related to this year’s tax return, spoke to local tax attorney Michelle Turpin, who has worked in tax law for more than 30 years and founded Michelle Turpin PC in the 1990s, which provides tax preparation services.

Is my stimulus check taxable?

No. The economic reviews or economic impact payments approved by Congress in March and December are not considered taxable income. New York Times columnist Ann Carns said Americans who were eligible but failed to get their checks for some reason can still get the money by using a discount-refund loan for their 2020 returns .

Can I deduct work-from-home expenses from my return?

The Tax Reduction and Employment Act of 2017 essentially eliminated deductions for unreimbursed employee expenses – work-related expenses paid by employees that were not reimbursed through their company. Before this law, workers could deduct any amount in excess of 2% of their gross income, but that provision has since been removed and the pandemic has not changed that.

“So there is no way for all of these employees to deduct the costs they incurred to work remotely,” said Turpin.

However, some companies have reimbursement policies that include work from home expenses that they can deduct.

“You could have said, ‘OK, coworkers, if you need to have an internet connection in your house, or if you need a computer or a bigger screen, or the cost of working at home, if you give us those receipts … then we will reimburse you for these amounts “and it would be a cost reduction for the company.”

Bottom Line: Individuals cannot claim these expenses for their returns, but there is an incentive for companies to reimburse them. Utahns can check with their own employers about their policies.

Will my PPP loan be taxed?

The Paycheck Protection Program was set up in March 2020 to provide credit to companies harmed by coronavirus prevention measures. Many of these loans were forgivable and were not intended to be repaid.

“When a company receives a loan, it is usually treated as taxable income,” the Utah State Tax Commission said in a fact sheet. “However, under the CARES Act, that income was treated as non-taxable for federal income tax purposes.”

And since the income was non-taxable, the Treasury Department ruled that expenses paid with PPP funds were non-deductible. However, since then Congress has passed HR133, which has made these expenses deductible.

“For Utah State Income Tax purposes, the outcome of the December action of Congress, combined with the provisions of SB6005 – a Utah law on PPP lending -” results in PPP expenses being fully deductible, while PPP- Loans granted are again taxable income in the year and to the extent in which they are granted. “

According to current law, issued PPP credits are taxed.

Turpin said many tax advisors are “waiting for Congress to sort out this rule.” “But I think it’s clear that if people don’t pay it back, it’ll be treated like any other loan,” she said. “When you borrow money, it is never considered taxable income. But any type of debt that is forgiven becomes apparent.”

Is unemployment insurance taxed?

Pandemic restrictions spurred unemployment spikes, which have since fallen, but are still leaving many more Utahns unemployed than they did at the time last year. And yes, for those who receive unemployment benefits, they are taxable.

“Hopefully they’re under the threshold of owing or owing a lot,” Turpin said, “but for those who are getting unemployed and maybe (married together) to someone with a higher income, I think they’re all will freak out if they find out they have to pay tax on all the money they get. “

Turpin said she hopes those who get unemployed can put a little bit of money from every check aside for taxes this year.

The deadline for filing the tax return for 2020 is Thursday, April 15th. According to the IRS, there are no plans to extend the deadline for this year as it did in 2020.


similar links

More stories that might interest you