Tax season is here and Corey Miles of Miles CPA in Afton says there are a few things to be aware of while filing your taxes this year with the COVID-19 pandemic from 2020.
While there have not been a lot of tax law changes, he says the stimulus checks are the first thing to monitor.
“A lot of people got those…at the first of 2020 and they also got some additional stimulus dollars just last month,” Miles said. “Both of those have to be reported on your tax return this year.”
He says if you inadvertently got overpaid, the federal government is not going to make you pay that back.
“But if they shorted you, the nice thing is, we can get some extra dollars in that tax return to make up that difference,” Miles said.
He says the stimulus is a “free-bee” meaning you do not have to report it as income, but you just have to report if you received it and how much you did get. He also says there are some differences with the Payment Protection Program (PPP) loans businesses received however. Some states are deciding to tax loan forgiveness, but the federal government will not.
“Utah just decided…they are going to tax it,” Miles said. “Completely different than what the federal government decided to do and I think Idaho will follow suit, but I don’t know that for sure.”
He says since Wyoming does not collect income tax you will not need to worry about that here locally. He also says another thing seniors should know is that for those over 72 in 2020, they did not have to take the Required Minimum Distribution (RMD).
“They’re not going to end up being taxed if they didn’t take that distribution during 2020,” Miles said. “So, that’s a bit of a change. I can’t remember when the Required Minimum Distribution was forgiven.”
He says that it used to be required that seniors had to take their RMD at 70.5 years of age, but that has now been pushed up to 72.
He also says that there are a few things to be aware of with charitable donations. He says the standard deduction has been pushed so high that many of his clients just go this route.
“But this year the thing that’s kind of nice is if you give money to charity whether that’s tithing or some other form,” Miles said. “If it’s a cash payment you can take a $300 deduction even if you go with the standard deduction.”
He says that people may need to remember that the unreimbursed employee expense reduction is gone as well. This means to get reimbursed you will have to go through your company you work for.
He says one last thing people may want to consider is if you have a High Deductible Health Plan going with a Health Savings Account is a great way to go.
“You get a really good deduction for that,” Miles said. “Plus, if you don’t use it for medical expenses in that year it carries with you into the next year and the next year.”
He says as long as you use it for medical expenses, it does not get taxed either. He also says if anyone needs help they can reach out to him as he has locations in both Afton and Alpine.