SHOULD YOU WAIT BEFORE FILING RETURN
March 28, 2021 - Douglas Myser
Should you wait before filing return. Multiple tax breaks that are available should be looked at prior to filing your tax return, to take advantage of potential savings for taxpayers. Some of these came with the newly enacted American Rescue Plan, and should be studied prior to deciding if you want to file for an extension on this years tax return. You can claim tax free treatment of up to $10,200 of 2020 unemployment benefits. The Senate version of the bill is the one most likely to become law and it includes a brand new break that will allow you to treat up to $10,200 of 2020 unemployment compensation as federal income tax free. If you already filed your return, double check to make sure it went into law, then file an amended return to collect the added benefit of not paying tax on that $10,200. Should you wait before filing return.
For the 2020 tax season, you can claim an above the line deduction for up to $300 of cash contributions to IRS approved charities. This temporary COVID-19 tax relief measure was included in the Coronavirus Aid, Relief and Economic Security Act (CARES Act). Above the line means you can take the write off whether you itemize deductions or not. The $300 limit applies equally to unmarried individuals and to married joint filing couples. However, if you use married-filing separate status, the limit is $150. First round stimulus payments can be up to $1200 per unmarried adult, up to $1400 per married couple, and up to another $500 per qualifying child. Singles and those who us married filing separate status can collect the maximum first round amount if their 2020 adjusted gross income does not exceed $75000. The AGI threshold is $150,000 for married joint filing couples and $112500 for those who use head of household filing status. Singles and those who use married filing separate status who have 2020 AGI above $99,000, joint filing couples with AGI above $198,000 and heads of household with 2020 AGI above $136500 are ineligible.