ORLANDO, Fla. (Ivanhoe Newswire) – Tax season is here! Your job, health, and finances may look a little different in the year of COVID-19, and that doesn’t stop with taxes. At one point, 42 percent of Americans were working from home, but according to a poll by the American Institute of CPA’s, 71 percent were not aware that working remotely in other states can have an impact on the amount of state taxes owed. What else do you need to know before you file?
If you’ve been online more than you’ve been in the office, you’re not alone! But did you know where you dialed in from could impact your tax refund? “If you work in a high tax state or a state that’s separate from yours now you’ve got two state income tax returns you’re going to have to file,” said Gary Kane, CPA, at Kane & Associates. Each state has their own tax laws, which varies by the number of days worked, so check with your advisor.
Don’t forget about your Roth IRA. Consider increasing your contributions. You will have to pay taxes on it up front, but the withdrawals are tax-free. “The tax brackets are like stair steps and so if your income is down, you’ve gone down the stair steps, and you’re paying tax at a lower rate,” said Kane.
And if you already have a high-deductible health insurance plan, cover the out-of-pocket costs with a health savings account. “That can grow and earn tax free, and you can use that money to pay your medical bills,” said Kane. Especially expenses your insurance doesn’t cover.
Gary Kane does say that if you’re questioning your stimulus check, know that you don’t need to report your stimulus payment on the tax return unless you failed to get one. In that case, if you report it on your return, it will be included in your refund, if you’re getting one, or a reduction in the amount you owe.
Sources:
https://www.education.ml.com/bol/Pages/Article.aspx?Title=10taxtipsfortheyearofcoronavirus
https://www.fidelity.com/learning-center/personal-finance/tax-moves-2020
https://www.mobileworkforcecoalition.org/problem
https://www.cnbc.com/2018/07/30/roth-vs-traditional-iras-how-to-decide-where-to-put-your-money.html
Contributor(s) to this news report include: Addlyn Teague, Producer; Bob Walko, Videographer and Editor.
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