2020 has been a very unpredictable year for all of us, especially those running businesses. With tax season among us, it is very important to consider these guidelines before filing.
Unemployment Compensation
Millions of people, many for the first time, have experienced receiving taxable unemployment compensation. This compensation is taxable and must be included as gross income. Some have opted into taking the federal tax out prior to receiving the compensation, but many did not and will have to pay when filing their return.
Home Office Deductions
The home office deduction is available to qualifying self-employed taxpayers, independent contractors and those working in the gig economy. However, the Tax Cuts and Jobs Act suspended the business – use – of – home deduction through 2025 for employees. Employees who receive a paycheck or W2 are not eligible for this deduction even if they are working from home.
Workers Moving Into The Gig Economy
In 2020, many workers have found in a different line of work including within the gig economy. Gig-economy workers generally do not have taxes withheld from their pay as salaried workers normally do. The IRS encourages people to make quarterly payments throughout the year instead of waiting until taxes are due to pay the entire sum.
For more information about all of the reminders to keep in mind when filing taxes, the IRS has put out a list: https://www.irs.gov/newsroom/important-reminders-before-filing-2020-tax-returns
The Kael Company Inc. would be happy to help you navigate your financial information and answer questions you might have before filing your taxes this year. We can help keep your business organized with everything from payroll and banking to budgeting and financial statements.
