I was trying to wait until our gov’t actually made some tax decisions we could rely on for the upcoming season, but it’s an election year, so that won’t happen until, well, after the election. Yay for December and January tax surprises!
One thing that hasn’t changed is the due date for 2019 income tax returns on extensions: October 15, 2020. If you still need to file, please call or email if you want an appointment or forward your documents to us ASAP for TeleTaxPrep!
Now for a few Fall 2020 Tax Tidbits!
Unemployment payments are normally Federal taxable income, but the extra part that was kicked in due to Covid-19 may or may not be. The IRS says yes, but Congress may change that in upcoming legislation. States all treat unemployment their own way. Most states, like Georgia, tax it ☹
Stimulus Payments are not Federal taxable income. They are technically an advance against a new refundable tax credit on your tax return filed next year, so they don’t affect your state taxes either 😊 Oh, no word yet on a possible second stimulus check, but I’m not holding my breath.
And then there’s the Payroll Tax Holiday. Beware! This is currently a deferment, which means you will have to pay that money back next year without additional legislation. That means you get bigger paychecks now, but starting around June 2021, your paychecks will be smaller by the same amount! Trump has stated he wants the amount forgiven and will move to make that happen if re-elected, but it requires legislation from Congress, so we shall see. Most employers, especially small businesses, have opted out of this program because of the future unknowns.
And finally for businesses, EIDL Grants are taxable income (“other income” for accounting purposes). PPP Loans (forgiven) are currently not taxable income, but IRS says you can’t write-off the expenses you use to get the loan forgiven, which means they really are sort of taxable because the numbers work out to be the same! Alas, our entire gov’t seemed to miss this “oversight” (well, I doubt the IRS did, but they stayed mum about it!), and they may fix it with upcoming legislation. Again, not holding my breath.
As always, we’re here if you have questions or need anything. Happy Fall 2020!