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COVID Items To Consider When Completing Tax Returns

/ The Upper Cumberland's News Leader
COVID Items To Consider When Completing Tax Returns

COVID has changed the way people live their lives, but it may have also transformed how your tax return will look this year.

Jennifer Phipps is the owner of Cookeville’s Phipps CPA. Phipps said unemployment benefits could have an impact on your tax position.

“Those who were receiving unemployment benefits during 2020, hopefully, you had your taxes withheld at that point,” Phipps said. “Because if not, then there could be a little of an unpleasant surprise at the tax return prep cause you may be owing.”

Phipps said another item to consider is stimulus checks. Those who did not receive one could decrease tax liability by noting that as a credit.

“That first stimulus check earlier within 2020,” Phipps said. “Some folks didn’t receive those, and that is not the end of the world at this point, because now you can put that on your income tax return. It is coming up to file it, and that can be a credit. You can get it now at this point.”

Businesses can also offset expenses for COVID precautions by counting purchases as deductibles, Phipps said.

“Whether that was more industrialized cleaning, or if it was certain safety equipment,” Phipps said. “Maybe, you purchased masks, hand sanitizer, all those things are deductible.”

Phipps said charitable donations are some more costs that can be deducted. Phipps said this can only happen the year it is paid out.

“Sometimes, there can be some tax planning that goes into making your donation,” Phipps said. “If you have a substantial amount you want to donate to an institution or a non-profit, there could be some strategy if you are looking for the greatest tax benefit in which year you do that.”

Some traditional IRA contributions are included in tax return deductions. Phipps said they can be added until the return is filed for the prior year.


The post COVID Items To Consider When Completing Tax Returns appeared first on News Talk 94.1/AM 1600.