How Your 2020 Taxes Are Affected by the Coronavirus Pandemic

You’ll need to know how much you’ve already received to claim the credit; If you don’t have the notices detailing the amounts (Notice 1444 for the first stimulus payment and 1444-B, for the second), you can find the information by setting up an individual online account. (Spouses filing jointly will have separate accounts.)

The quickest way to receive the credit is by filing a tax return electronically and having the money direct deposited, even if you don’t need to file otherwise. If you earn $72,000 or less, you can do it free through the I.R.S. Free File program.

It’s possible, particularly if your financial situation or status changed last year.

The recovery credit on the 2020 return is based on an individual’s 2020 tax year information, while the second stimulus payment was based on the 2019 tax year. (For the first stimulus check, the I.R.S. said, a 2018 return may have been used if the 2019 one was not filed or processed.) So if your income dropped in 2020, and you didn’t receive the full amount, you could potentially receive more.

The same goes for changes in life circumstances. If you had a child in 2020, for example, you may be eligible for more money, or maybe you’re no longer a dependent on your parents’ tax return (and were in 2019), which may make you eligible.

Undocumented immigrants without Social Security numbers are ineligible for payments — and the CARES Act, the $2 trillion relief package signed into law in late March, also prevented most spouses and children from receiving checks as well, even if they were U.S. citizens.

The December relief bill changed that, at least in part. Now, married couples filing joint returns may be eligible to recover payments for a spouse who has a valid Social Security number, the I.R.S. said. Each child with a Social Security number is also eligible for payments.

To determine if you qualify, use the Recovery Rebate Credit Worksheet or tax preparation software.

The latest relief package includes another stimulus payment of up to $1,400. The I.R.S. will calculate payments based on your most recent tax return.

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A Break for Working Families

The “lookback” also applies to the child tax credit, which is partly refundable. The credit is worth up to $2,000 for each child under 17.

The problem is that some people may not know about the option, Mr. Flacke said. He urged people to have their 2019 tax return handy when they do their taxes or meet with their preparer and to double check which year’s income would result in a bigger refund.

So how do you qualify for the earned-income tax credit? For 2020, the credit is available for families earning up to about $57,000. Individual filers earning up to about $16,000, with no children, can get a credit of up to $538. (There are also limits on investment income.)

You can see if you qualify by using the I.R.S.’s online assistant.

Because many people lost income last year, families who don’t usually claim the credit might qualify for it this year, the I.R.S. said.

Even in a normal year, millions of eligible people fail to claim the credit, according to the Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution. Some people have income so low that they aren’t required to file a federal tax return and may not realize they can claim the credit by filing one.

Roxy Caines, director of the earned-income tax credit campaign at the Center on Budget and Policy Priorities, a research group, encouraged filers to check if they qualify since changes in family situations, as well as income, may affect eligibility. Plus, if you didn’t claim the credit in a previous year but think you would have qualified, you can file and claim it for up to three previous years, she said.

The I.R.S. began accepting tax year 2020 returns on Feb. 12. People expecting refunds usually file early. But because of fraud prevention steps, the I.R.S. must wait until after mid-February to issue refunds to most people claiming the earned-income credit. Early filers should start receiving their refunds this month. They can check the status of their refund using the I.R.S.’s refund tool.

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A Love Letter to My Accountant

When it was my turn, it was well past 9 p.m. He looked over my papers, all my accounting of trying to make a life out of words. “Hmm,” he said, “hmm.” He told me I would owe a tax bill in the low thousands. I almost blacked out. “But,” he said gently, “that just means you’re successful. You’ve made this much from writing.”

My accountant taught me that even in a life of pursuing art, where uncertainty is built in, some care can be taken to make plans, to plan for success, not just wish to succeed, and in planning offer myself some ballast against nothing at all going according to plan. It’s a difficult lesson to learn — the lives of great artists are riddled with instability. But he also reminds me, every April 15, not to block my blessings, not to decide I already know how my artistic career will end, that life can surprise you with good things as well as bad.

How Has the Pandemic Changed Your Taxes?

Nope. The so-called economic impact payments are not treated as income. In fact, they’re technically an advance on a tax credit, known as the Recovery Rebate Credit. The payments could indirectly affect what you pay in state income taxes in a handful of states, where federal tax is deductible against state taxable income, as our colleague Ann Carrns wrote. Read more.

Mostly.  Unemployment insurance is generally subject to federal as well as state income tax, though there are exceptions (Nine states don’t impose their own income taxes, and another six exempt unemployment payments from taxation, according to the Tax Foundation). But you won’t owe so-called payroll taxes, which pay for Social Security and Medicare. The new relief bill will make the first $10,200 of benefits tax-free if your income is less than $150,000. This applies to 2020 only. (If you’ve already filed your taxes, watch for I.R.S. guidance.) Unlike paychecks from an employer, taxes for unemployment aren’t automatically withheld. Recipients must opt in — and even when they do, federal taxes are withheld only at a flat rate of 10 percent of benefits. While the new tax break will provide a cushion, some people could still owe the I.R.S. or certain states money. Read more.

Probably not, unless you’re self-employed, an independent contractor or a gig worker. The tax law overhaul of late 2019 eliminated the home office deduction for employees from 2018 through 2025. “Employees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home,” the I.R.S. said. Read more.

Self-employed people can take paid caregiving leave if their child’s school is closed or their usual child care provider is unavailable because of the outbreak. This works similarly to the smaller sick leave credit — 67 percent of average daily earnings (for either 2020 or 2019), up to $200 a day. But the caregiving leave can be taken for 50 days. Read more.

Yes. This year, you can deduct up to $300 for charitable contributions, even if you use the standard deduction. Previously, only people who itemized could claim these deductions. Donations must be made in cash (for these purposes, this includes check, credit card or debit card), and can’t include securities, household items or other property. For 2021, the deduction limit will double to $600 for joint filers. Rules for itemizers became more generous as well. The limit on charitable donations has been suspended, so individuals can contribute up to 100 percent of their adjusted gross income, up from 60 percent. But these donations must be made to public charities in cash; the old rules apply to contributions made to donor-advised funds, for example. Both provisions are available through 2021. Read more.

At the end of our first meeting, he said to me, gravely, “You are good at this. You are going to make money as an artist. You need to be ready for it,” and he told me what funds to put money in, which retirement plans to invest in, for the following year. I went back to him a year later, when I was getting married, and he gave me advice for my taxes then. He told me, poignantly, “Don’t get married on Christmas or New Year’s. It will ruin those days for you.”

By then, I had talked to him long enough to know that he had been married and divorced, and that he had seven adult daughters of his own, all trained as accountants — they helped him out during tax season. Sometimes I would call his office after negotiating a contract or finding out about a grant, and I would only get the machine. This was because, he’d explained to me, he took off six months out of the year to travel around West Africa to collect the art that I saw in his office.

The last time I saw him in person was the 2019 tax season. I was five months pregnant, my then-husband had just lost his job, and we were suddenly both living off a research stipend for a fellowship I had. He sat with us and assured us it would be OK. I was stressed about money, stressed about my baby’s future, stressed about how I was going to pay for my looming hospital bills. Talking to him was one of the few times during that turbulent pregnancy when I felt like I was being taken care of by another person, instead of taking care of everyone else — a gift for which I will always be grateful.

Last pandemic’s tax season was pushed back again and again by the catastrophe. I did my taxes in June on the back porch of the house I was living in during quarantine, paying a masked sitter $20 an hour for the privilege of talking to my accountant on the phone without a baby in the background. I realized my relationship with him is the most positive one I’ve ever had with a man over money. As I updated him on my pandemic year — marriage over, job offers gone, quarantining in another state — he only murmured sagely into the phone. He’d seen it all. “But I did what you told me to last year and paid my estimated tax,” I said.

“You listened to me?” he replied, with a fatherly warmth. “Of course,” I said. “None of my clients ever do,” he laughed. And then he said he’d set me up for 2021, because I’d followed his directions. It was one of my proudest moments in the hazy, heady year.

Kaitlyn Greenidge is the author of the forthcoming novel “Libertie” and the features director at Harper’s Bazaar.

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The Tax Headaches of Working Remotely

New Jersey, however, has said it will give its newly telecommuting residents a credit for those New York taxes for 2020, even though it is entitled to the revenue because the taxpayers are now working within its borders, Mr. Walczak said. So residents won’t, for now, have to worry about double taxation. But New Jersey estimates that it is forgoing more than $1 billion in revenue as a result — suggesting that the practice is unlikely to be sustainable in the long term, Mr. Walczak said.

How Has the Pandemic Changed Your Taxes?

Nope. The so-called economic impact payments are not treated as income. In fact, they’re technically an advance on a tax credit, known as the Recovery Rebate Credit. The payments could indirectly affect what you pay in state income taxes in a handful of states, where federal tax is deductible against state taxable income, as our colleague Ann Carrns wrote. Read more.

Mostly.  Unemployment insurance is generally subject to federal as well as state income tax, though there are exceptions (Nine states don’t impose their own income taxes, and another six exempt unemployment payments from taxation, according to the Tax Foundation). But you won’t owe so-called payroll taxes, which pay for Social Security and Medicare. The new relief bill will make the first $10,200 of benefits tax-free if your income is less than $150,000. This applies to 2020 only. (If you’ve already filed your taxes, watch for I.R.S. guidance.) Unlike paychecks from an employer, taxes for unemployment aren’t automatically withheld. Recipients must opt in — and even when they do, federal taxes are withheld only at a flat rate of 10 percent of benefits. While the new tax break will provide a cushion, some people could still owe the I.R.S. or certain states money. Read more.

Probably not, unless you’re self-employed, an independent contractor or a gig worker. The tax law overhaul of late 2019 eliminated the home office deduction for employees from 2018 through 2025. “Employees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home,” the I.R.S. said. Read more.

Self-employed people can take paid caregiving leave if their child’s school is closed or their usual child care provider is unavailable because of the outbreak. This works similarly to the smaller sick leave credit — 67 percent of average daily earnings (for either 2020 or 2019), up to $200 a day. But the caregiving leave can be taken for 50 days. Read more.

Yes. This year, you can deduct up to $300 for charitable contributions, even if you use the standard deduction. Previously, only people who itemized could claim these deductions. Donations must be made in cash (for these purposes, this includes check, credit card or debit card), and can’t include securities, household items or other property. For 2021, the deduction limit will double to $600 for joint filers. Rules for itemizers became more generous as well. The limit on charitable donations has been suspended, so individuals can contribute up to 100 percent of their adjusted gross income, up from 60 percent. But these donations must be made to public charities in cash; the old rules apply to contributions made to donor-advised funds, for example. Both provisions are available through 2021. Read more.

The practice of states reaching outside their borders to tax telecommuters was an issue even before the coronavirus showed up, and it is getting more attention because of a spat between New Hampshire and Massachusetts. Massachusetts said last year that it would tax the income of out-of-state residents who had worked in the state but were telecommuting during the pandemic. This miffed neighboring New Hampshire, which has thousands of residents who commute to work in Boston and other cities in Massachusetts. In October, it filed a lawsuit asking the U.S. Supreme Court to hear its complaint. (More than a dozen other states — including New Jersey — have filed briefs urging the court to consider the case.)

The workers in New Hampshire aren’t being double taxed because New Hampshire is one of nine states that have no state income tax. But New Hampshire officials object to residents being taxed by another state for work done inside its borders. (Massachusetts said in a filing in response to the suit that the policy maintains the prepandemic “status quo.”)

As remote work could remain popular even after the pandemic, federal action may be needed to make state income tax rules for telecommuting more uniform, tax experts say. A group called the Mobile Workforce Coalition says it is building bipartisan support for reform.

“Telecommuting,” Mr. Sobel said, “is going to become the norm.”

So if you worked in a state other than your usual one in 2020, how should you approach tax season?

First, make a list of any states where you worked remotely, even if it was for a brief period of time, accountants suggest. If you didn’t keep close track, try to approximate the number of days worked in each state. State laws vary, but typically income is taxed once you reach a threshold, like the amount of money earned, the number of days you worked in the state or a combination of the two. About half the states start the clock at just one day, while others use 30 or 60 days.

These sorts of rules generally apply not just to employees but also to freelancers, said Dina Pyron, global leader of the mobile tax preparation app EY TaxChat. “It doesn’t matter if you are an employee or a contractor.”

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