SAN ANTONIO — The pandemic forced many of us to work from home, but not so fast on claiming a deduction on your home office. It is only for a certain set of at-home workers.
“The Home Office tax deduction has been around since the 60s or 70s,” said Mark Steber, the chief tax information officer for tax preparation service Jackson Hewitt. “This year with so many Americans working from home, it stands to reason I’ve got a home office. Wrong. The reality is the Home Office deduction is applied for people who have a home office business, self-employed, but just because you have a home office and just because you’re working from home does not mean you meet the prerequisite requirements.”
For those not working, state and federal unemployment payments are taxable, but you will get a bit of a break.
“The first $10,200 of unemployment benefits are not taxable,” said Steber. “Only amounts over that are taxable.”
Stimulus payments are not taxable. Plus, there is no penalty for not having health care, but you still to include your healthcare on your taxes.
“If you bought your health care through a state network, you still have to report it or your refund will get delayed and weeks and months,” said Steber.
For those self-employed who missed work because of the pandemic, there is a credit for you.
“That credit is basically you can take up to 10 days of sick leave due to COVID-19, either because you were diagnosed or you had to take care of someone who was diagnosed,” said Jose Garcia, an accountant and owner of Mission Tax and Financial Services. “Also, if you are a self-employed business and your office had to close for a period of time, that is also accounted for.”
National Guard or Reserve members who deployed might also get a tax break.
If their deployment takes them more than 100 miles outside of home, any unreimbursed expenses associated with that can be deductible,” said Mary Stork, president of investment services with USAA.
If you are married, consider filing this way:
“For the vast majority, it’s to file jointly that gives you the benefit of the full tax deduction, the standard deduction, as well as other tax credits,” Stork said. “Those get reduced when you file separately.”
Donations of $300 to a charity can also reduce your tax bill.
“You want to make sure that you get a receipt for the full value of what you’ve donated, whether it’s goods or a monetary donations,” Stork said. “You also want to make sure that the charity is a 501C3.
Or contribute to your IRA for another deduction.
“I consider it a win-win,” Stork said. “You’re investing in yourself. You’re investing in your future and your retirement. Plus you get a tax break or a tax deduction for that.”
Steber said if you plan to file your taxes your self make sure you understand the tax code.
“Learn the rules or you’ll risk leaving something off,” he said. “Unfortunately, this is another great myth: The IRS will fix that for me, won’t they? They’ll add that money back. They’ll adjust it. No, they’re good at collecting their money, not making sure you get your money.”
He said also to watch out for pop-up tax preparers.
“A lot of folks are tax pros at this time of the year,” said Steber. “Make sure you go to someone branded and credentialed with a guarantee of service and that they’ll be there this summer when you get that IRS notice because you didn’t tell them about unemployment benefits that you didn’t think were taxable. So go to a good pro this year.”
The government gave Texans a small gift. The deadline to file is extended for two months until June 15, 2021. Those who make less than $72,000 can file their taxes for free at IRS.gov. File online to get your refund the quickest.