UPDATE March 31, 2020: There are some states (including Colorado) who either haven’t signed on to the unemployment exclusion, their laws don’t allow for taxes to be excluded, or they don’t tax unemployment benefits all together. For more information we are referring you to this article on CNBC.

We also corrected the amount of the federal exclusion in our post to $10,200.00 (married filing joint to $20,400.00) —

Well, now that we are almost done with the first quarter of 2021, and congress has made changes to your 2020 tax return. So how is this going to affect you?

  1. If you were on unemployment in 2020, then now you can exclude up to $10,200.00 from your taxes. This is per person, not per tax return so if you are married filing joint and you and your spouse were both on unemployment then you can exclude $20,400.00 from your federal taxable income. However, it is important to note that not all states will also exclude that income. If you have already filed your tax return the IRS has said they will adjust your return, and not amend it. The individual states however have not said anything yet as of today, so it is possible you will still need to amend your state return(s).
  2. The filing deadline has moved to May 15th – this is only for the 2020 tax return. If you have back taxes to file you will still want to get them filed as soon as possible. About half of the states – including Colorado – have also extended and the rest are expected to do the same soon. If you live in Louisiana or Texas, your taxes have been extended for both federal and state to June 15th because of the recent winter weather. For your peace of mind and my sanity, we are going to follow our normal procedures and file extensions on April 15th just to make sure nothing is missed. It has not been determined if other deadlines associated with the April 15th deadline such as IRA payments and such have also been extended. Rest assured that if we have your returns ready before that date it will be submitted on time.
  3. Charitable donations are now deductible up to $300.00 for Single filers and $600.00 for Married filing joint; even if you don’t itemize deductions; but if you do itemize, you can write off charitable donations up to 100% of your adjusted gross income for 2020. Unfortunately, they passed this after the 1st of the year so you can’t go back and add more donations, but the same deductions will also apply in 2021.

As always, when it comes to the Internal Revenue Service and Congress, the rules are always a moving target. But we will be sure to let you know of any updates when they happen and how any changes might affect you. Give us a call or schedule a time to discuss any of the changes or if you just want to get a jump on 2021 changes that come down the wire.