Hobby activities are a source of income for many taxpayers. As a reminder, this income must be reported on tax returns. But the reporting rules are different than for income from a for-profit business. For one thing, hobbyists can’t deduct their hobby expenses.
Penalty Relief for Certain 2019 and 2020 Tax Returns
Penalty relief for struggling taxpayers affected by the COVID-19 pandemic is now available to most people and businesses who file certain 2019 or 2020 returns late. Eligible income tax returns must be filed on or before September 30, 2022, to qualify for this relief. Furthermore, the nearly 1.6 million taxpayers who have already paid these penalties will automatically receive more than $1.2 billion in refunds or credits. Many of these payments will be completed by the end of September.
How Teleworking Is Changing Your Tax Obligations
As the COVID-19 pandemic persists, many employers continue to encourage or require their employees to work from home (i.e., telework). These remote working arrangements have tax implications. Here’s how they could affect you.
What is an Economic Impact Notice?
After a taxpayer has been issued an Economic Impact Payment, the IRS is required to mail an Economic Impact Notice to the recipient at their last known address. This notice provides information about the amount of the Economic Impact Payment, how it was made, and how to report any payment that wasn’t received.
Coronavirus-Related Distributions and Loans
The Coronavirus, Aid, Relief, and Economic Security (CARES) Act made it easier to access savings in IRAs and workplace retirement plans for those affected by the coronavirus. This relief provided favorable tax treatment for certain withdrawals from retirement plans and IRAs, including expanded loan options.
Q & A: The $10,200 Unemployment Tax Break
Generally, unemployment compensation received under the unemployment compensation laws of the United States or a state is considered taxable income and must be reported on your federal tax return. However, a new tax break — in effect only for the 2020 tax year — lets you exclude the first $10,200 from taxable income. Here’s what you should know:
Personal Protective Equipment Qualifies for Deduction
As a quick reminder, the purchase of personal protective equipment, such as masks, hand sanitizer, and sanitizing wipes, for the primary purpose of preventing the spread of coronavirus are deductible medical expenses.
How Teleworking Is Changing Your Tax Obligations
As the COVID-19 pandemic persists, many employers continue to encourage or require their employees to work from home (i.e., telework). These remote working arrangements have tax implications. Here’s how they could affect you.
Tax Filing Season Starts February 12
Although tax season usually starts in late January, this year, the tax filing season is delayed until February 12, 2021. The delayed start date for individual tax return filers allowed the IRS time to do additional programming and testing of IRS systems following the December 27, 2020, tax law changes that provided a second round of Economic Impact Payments and other benefits to many taxpayers. This programming work is critical to ensuring IRS systems run smoothly to minimize refund delays and ensure that eligible people will receive any remaining stimulus money as a Recovery Rebate Credit when they file their 2020 tax return.
Employer Tax Credit Extended for Payroll Workers
The Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted December 27, 2020, made several changes to employee retention tax credits. These tax credits were previously made available under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The most notable change was the modification of the Employee Retention Credit (ERC). Several of the changes apply only to 2021, while others apply to both 2020 and 2021. As such, employers can take advantage of the newly-extended employee retention credit, designed to make it easier for businesses that choose to keep their employees on the payroll – despite challenges posed by COVID-19.