It’s time for another tax season, and with that we thought it would be a good time to offer a few pointers on what to expect on your 2020 tax returns.
*Trusted Health are not tax professionals and do not claim to be, we are sharing general information to help get you started with your own research.*
Like everything else in 2020, COVID-19 will impact the tax preparation process. As a result of COVID-19, many of us received economic stimulus payments from the IRS, starting back in April 2020 and continuing into January 2021.
So far, there have been two rounds of payments issued by the IRS. It is super important to report the exact amount of each stimulus payment you received. If you don’t, your tax return may be rejected by the IRS and your refunds could be delayed.
Starting a Business?
With so many Americans now working from home, there were a record number of new businesses started in 2020. In fact, over 4.4 million new businesses were formed in 2020.
We’ve fielded many questions from travelers this year looking to start a business, and we always provide the same advice — while we support the entrepreneurial spirit of travelers in every way, use caution when deciding to take tax deductions for a new business.
Be certain that your business has a well developed plan to generate revenue, and be meticulous about keeping records of all expenses.
As always, this is the #1 question we address with our clients. As a traveler, it’s critical that you maintain your tax home. Doing so will allow you to continue to receive those tax-free stipends. This means you must keep good records of your living expenses, return home regularly, and find work at home whenever possible.
For a more detailed discussion of your specific circumstances, please contact Travel Nurse Tax.
Getting Ready for Filing Season
As many of you know, our government recently passed a third stimulus bill, dubbed the “American Rescue Plan." The bill includes many measures to help taxpayers manage the burdens brought on by COVID-19.
Below is a summary of the bill, as well as other recent changes, and how they impact your taxes:
Stimulus Payment #3
- Taxpayers will receive $1,400 per individual, $2,800 per married couple, and $1,400 per eligible dependent
- Individuals who earn up to $75,000 in adjusted gross income, heads of household with up to $112,500, and married couples who file jointly with up to $150,000 will get the full $1,400 per person
- These payments ill be direct deposited and many payments have already been made by the IRS
Unemployment Tax Break
- The first $10,200 of Unemployment Compensation received, per person, will not be taxed Federally in 2020
- State guidelines vary; at this time many states will tax this money
- Taxpayers must earn under $150,000 to receive this tax break, regardless of filing status
- If you have already filed your 2020 Tax Returns, the IRS has advised that you NOT file an amendment just yet; They are working out the details on how to correct this, and we will provide you with an update when available
IRS Extends Filing Deadline
Separate from the American Rescue Act, yesterday the IRS announced an extension of the Federal Tax Filing Deadline. Individual Federal Tax Returns and taxes owed are now due by May 17, 2021. This gives us about one extra month to prepare and file your Federal tax returns.
Note: This extension does not yet apply to state tax returns. As of now, may state tax returns and taxes are still due on April 15th. With that in mind, we recommend submitting your tax forms to us as soon as possible, so we can ensure the Federal and State filings are made in a timely manner.
Stimulus Payments #1 and #2
Note that if you did NOT receive the full Stimulus payments ($1,200 in 2020 and $600 earlier in 2021), you may be able to claim these on your 2020 tax returns. Please include the exact amount of Stimulus Payment #1 and #2 when you submit your tax forms.
Additional Travel Nurse Tax Resources
- Trusted Guide to Travel Nurse Taxes
- Trusted Guides Travel Nurse Taxes: What Are Tax Homes?
- Trusted Guide to Nurse Pay
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