Keeping track of income and expenses is essential, even if you don't own a business. And if you do own a business, things get even more complicated. There are paychecks to issue, taxes to track, and subcontractors to pay out. All of these details are a whole lot less challenging when you hire an accountant to oversee them. However, it is still important to know a little bit about accounting yourself. Dig into the articles on this website, and you'll gain a better understanding of accounting principles, what services accountants really offer, and the benefits of hiring these professionals to assist with your finances.
It may not seem like it, but 2020 is more than halfway over, which means it is time to start thinking about the tax implications for this year. There are some important changes you need to be aware of when it comes to filing your taxes for the 2020 tax year in 2021.
Important Change #1: Increased Standard Deduction
If you choose to take a standard deduction, you will be able to enjoy a slightly bigger standard deduction this year. If you are married and filing jointly, you can take a standard deduction of $24,800, which is a $400 increase.
If you are married and filing separately, you can take a $12,400 deduction, which is a $200 increase. You can take the same deduction if you are single. If you are head of household, you get to enjoy an $18,650 deduction, up to $300. The standard deduction is designed to increase based on yearly inflation rates.
Important Change #2: Charitable Deduction
Starting in 2017, you could only write off charity donations if you choose to itemize your deduction. If you took a standard deduction, you would not be able to write off your charity donation.
However, with the current CARES Act, you can deduct up to $300 in charitable donations, and you will still get to take the standard deduction, keeping your taxes simple while allowing you to donate to charity and save on your taxes at the same time.
Important Change #3: No Taxes on 2020 Stimulus Payment
If you received a 2020 stimulus payment check, you don't have to worry about how it will impact your taxes. It is considered a recovery rebate, which means that it is not taxable, and will not be included in your taxable income.
That means if you owe taxes, you will not have to pay back the stimulus payment. If you are owed a refund in 2020, you 2020 stimulus payment will not take away from your refund.
Important Change #4: 2020 Unemployment is Taxed
If you received enhanced unemployment benefits in 2020 due to the extra money provided by the federal government, you will have to pay taxes on your unemployment. This is just regular operating procedure though, as unemployment income is always considered taxable income.
Talk to an accountant today to make sure you are paying enough in taxes so you will not owe taxes at the end of the year. An accountant can also help you with prepare your taxes next year, and make sure that everything is properly applied to your taxes.
If you are in the need of further assistance, consider finding a professional that offers tax preparation services.