Many Americans are concerned about their finances and taxes, especially if their economic situation changed during the COVID-19 pandemic. Here are our answers to some of their most common questions.
I’m currently working from home while my employer’s office is closed. Can I deduct any of the related expenses?
Not at this time. If you are an employee working remotely, there are established regulations that determine whether or not you qualify for deductions related to home office expenses. For employees from 2018-2025, home office expenses are not deductible. By 2026, some employees may be permitted to deduct home office expenses, but only if the office is for the convenience of the employer and upon meeting certain requirements.
However, these rules apply specifically to employees. Business owners working from home may qualify for home office deductions.
My son currently receives unemployment benefits due to a recent layoff, are these taxable?
Yes. Federal tax law requires the taxation of unemployment benefits. This includes both state unemployment compensation and the temporary $600 per week from the federal government. And based on your son’s residence, additional state taxation may be required as well.
Your son can either make estimated tax payments to the IRS or request that the taxes are automatically withheld from his unemployment benefits.
My stock values are lower than before. If I sell losing stock now, can I deduct this loss on my 2020 tax return?
Only in certain circumstances. If you sold both a losing stock this year and stock at a gain, you’ve accrued both a capital loss and a capital gain. The losses and gains for the year but be netted against one another in a specific order, based on whether they’re short-term (held one year or less) or long-term (held for over a year.)
After the netting, both your short-term or long-term losses can be used to offset up to $3,000 in ordinary income, or $1,500 for married taxpayers filing separately. Any loss beyond the initial $3,000 is carried forward to later years until it is either offset by capital gains or deducted against ordinary income, though still subject to the $3,000 limit.
The tax filing deadline was extended until July 15th this year. Does this give me more time to contribute to my IRA?
Yes! You can continue to contribute to your IRA for the 2019 fiscal year until the July 15 tax deadline. Based on your eligibility, you can contribute up to $6,000 to an IRA plus an additional $1,000 of “catch-up” funding if you were age 50 or older on December 31, 2019.
What do I need to know about making estimated tax payments for 2020?
The 2020 deadlines for estimated tax payments for both the first and second quarter have been extended until July 15th, 2020.
Need help?
Have more tax-related questions related to COVID-19? We can help. Contact us with your additional questions or for more information about the topics discussed above.
Reach out to your trusted Smolin professional with any questions or concerns.