PHOENIX — It's almost income tax filing time again. The Internal Revenue Service starts taking federal returns on February 12th.
And this year, there are some changes because of COVID-19. For those who received stimulus money, there's good news.
That money is not considered taxable nor is any government money received for rental assistance.
However, it's a different story for unemployment compensation. Unemployment is taxable. But how much you owe at tax time depends on how much you had taken out for taxes in each unemployment payment.
Check your statements. The law allows a flat 10% withhold from benefits to cover tax liability.
As for deductions, many Arizonans worked from home during much of 2020, which means more internet, phone and other costs.
Can you deduct home office expenses? If you're self-employed, an independent contractor, you can deduct some home office expenses.
If you're an employee and get a W-2 from an employer you're out of luck. There is no federal or state deduction.
Unfortunately, it's the same for any expenses while your kids are taught from home. No deductions.
But, if you're a teacher and paid for personal protective equipment out of pocket, it can go toward your $250 educator tax deduction.
Also new in 2020 is a charitable deduction if you don't itemize. It's for cash contributions up to $300 that is deducted from your taxable income.
Regarding the stimulus payment, if you qualified but didn't receive the $1200 first check, or the $600 second check, you can file for a Recovery Rebate Credit on your taxes.
It will reduce what you owe or add to a refund.
Learn more about the rebate credit here.
Do you qualify for free tax filing? Click here for more information.
