Here are four changes for tax year 2020 around COVID-19 to be aware of as you head into the upcoming tax season.
1 min read
Tax year 2020 came with quite a few changes (largely due to the pandemic). Here are four changes around COVID-19 to be aware of as you head into the upcoming tax season.
Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, eligible taxpayers can claim the Recovery Rebate Credit on their Form 1040 or Form 1040-SR for 2020. Taxpayers may be eligible if they fall into one of the following categories:
Taxpayers who received the correct amount for their Economic Impact Payment do not need to fill out any information about the Recovery Rebate Credit on their Form 1040. The money they received is not taxable.
Paycheck Protection Program (PPP) loans may be forgiven fully or partially depending on what expenses a business spent their funds on. Borrowers should apply for loan forgiveness with their lender.
Loan forgiveness amounts are not taxable.
Under the COVID-19 Relief bill signed into law December 27, 2020, PPP-funded expenses are tax-deductible.
Under the CARES Act, the 60%-of-AGI limitation is lifted for cash donations for taxpayers who itemize. This means that they can elect to deduct up to 100% of their 2020 AGI (donations to donor-advised funds and private, non-operating foundations do not qualify).
Taxpayers who take the standard deduction will be able to take a new “above-the-line” deduction for $300 of cash donations.
For corporations, the taxable income limit on cash charitable contributions is increased to 25%, up from 10%.
Taxpayers affected by COVID-19 may withdraw up to $100,000 from IRAs, workplace retirement plans such as 401(k)s and 403(b)s, and personal retirement accounts and will not be subjected to the 10% early withdrawal penalty. Distributions are taxable, but those taxes can be spread over three years.
Additionally, now taxpayers can withdraw up to $5,000 per spouse for birth or adoption-related expenses without incurring the early withdrawal penalty.
Loan limits from qualified retirement plans between March 27, 2020 and Sept, 23, 2020 may be increased to the lesser of the following for taxpayers impacted by COVID-19:
Plus, taxpayers will have six years to repay the loan (increased from five years).
This post is an excerpt from our ebook: What You Need to Know for Tax Season 2021. You can find more information on changes for tax year 2020 by downloading the full ebook.
Explore more of our recent Articles, User Stories, and Ebooks.
1 min read
6 min read
Eva Rosenberg, MBA, EA, known as the Internet’s TaxMama®, publishes the popular TaxMama.com website, cited by Consumer Reports magazine as a top tax advice site, and a LIFE Magazine Editor’s Pick.
Canopy takes the headaches out of client management by offering a way to keep client info organized.
I love how easy it is to setup a new client in this software. Once set up, it's one click to get IRS transcripts downloaded for my review. This saves me at least an hour each week in comparison to the software I used to use.
This makes workflow for tax resolution manageable. This business is a bunch of hurry up and wait. This system helps to refresh my memory while transitioning to different clients.
The ability to securely share documents with clients as well as complete POAs from client contact data already in Canopy. The ability to route workflow between team members with color coded statuses allows us to work efficiently.
Cool features, outstanding customer service, constantly updating to make it better. I love that I can upload files easily to a secure client portal and we don't have to email files anymore. Absolutely can't imagine not having this software.
It's safe and secure. Clients are able to upload documents and the documents are saved their portal which as a result, keeps us better organized. The task feature keeps us organized and we know exactly the status of each client.
Submit this form, and we will be in touch soon to give you a custom demo.
Set a time for one of our product specialists to give you a guided tour practice.