Tax changes and extensions for your 2020 return
The Internal Revenue tax season began Feb. 12, meaning individual tax returns begin being accepted and processing begins. Here are some key figures to be aware of.
The new standard deduction for singles is $12,400; for married joint filers it is $24,800. For heads of household, it’s $18,650.
The contribution limits for IRAs, traditional or Roth, have not changed. The limit is $6,000, with an additional $1,000 for individuals aged 50 and over.
The contribution limits for 401(k), 403(b) and most 457 plans were increased to $19,500. For individuals 50 or older, the limit is increased by $6,500.
If you have earned income and are older than 70 , you are now allowed to make traditional IRA contributions. Prior to 2020, you could only contribute to Roth IRAs after 70 .
Health savings accounts (HSAs) have numerous tax advantages. If eligible, you should consider these accounts. Individuals can now contribute up to $3,550; if you have a family plan, the contribution limits have increased to $7,100.
The CARES Act specified that if you don’t itemize, you can make an “above the line” deduction for cash contributions to a qualified charity for up to $300 for both individual returns and joint returns. For 2021, the marriage penalty has been eliminated, so on your 2021 return, you will be able to claim a deduction on a joint return of up to $600.
For 2020 and 2021, for itemized returns, you will be able to deduct up to 100% of your adjusted gross income (AGI) if you make a cash contribution to a qualified charity that is not a donor-advised fund or a 509(a) (3) supporting organization.
Any medical expenses in excess of 7.5% of AGI may be deducted. The rate had previously been raised to 10.0%.
Business meal deduction: For 2020 and 2021, you will be able to deduct 100% of business meal expenses. Previously only 50% was allowed.
Flexible spending account (FSA) balances from 2020 can be carried into 2021. Remaining balances at the end of 2021 can be rolled forward into 2022. Previously, there were limitations regarding the amounts that could be carried forward.
The tuition and related expense deduction has been replaced by a more generous lifetime learning credit. The deduction could be up to $4,000 for lower income levels, or up to $2,000 for middle income levels.
Eligibility for 2020 earned income tax credit and for the child tax creditcan be based on 2019 earned income if you wish. There is no requirement of an intention to work. Even if you left the workforce in 2019, retired in 2020 or voluntarily did not work a significant amount in 2020, you may be able to receive one or both credits for 2020.
The CARES Act authorized employers to provide up to $5,250 of annual tax-free educational assistance for employee’s principal or interest of student debt. This has been extended through 2025. These payments can be made directly to a lender or to the employee, who can use the payments to reduce their student debt.
Historically, if a lender forgave debt on a primary residence, the borrower would incur tax liability on the forgiven amount. In 2007, Congress provided a temporary exclusion for qualified canceled mortgage debt that was recently extended through 2025. Starting in 2021, the maximum amount of debt that can be discharged has been reduced from $2 million to $750,000 for joint filers and from $1 million to $375,000 for single filers.
For a quicker return of refunds, I recommend filing electronically. The IRS still hasn’t processed thousands of paper returns from 2019.
And if you haven’t received either stimulus payments from 2020, you can request a recovery rebate credit on your 2020 tax return. You must request the rebate on either 2020 form 1040 or form 1040-SR. You should use the IRS recovery rebate credit worksheet for directions. If you are a non-filer because you did not have to file a return for 2018 or 2019, you will have to file a 2020 return in order to receive a payment.
If you want to lower the interest rate on your credit card balance, you’ll have to search harder for a good deal.
Card issuers became more cautious as the pandemic caused the economy to crater, and some cut back on low-rate balance transfers. American Express, for example, is not offering balance transfers for now.
The issuers that are still offering balance transfers have tightened their approval standards. You may need a FICO credit score of at least 725 or so to snag a card with an introductory 0% interest rate, compared with a minimum score of about 670 before the pandemic hit, says Ted Rossman, industry analyst with CreditCards.com. Your income and debt levels affect your eligibility, too. And issuers are reducing card limits. “Even if you qualify for a 0% balance-transfer card, you might not be able to move all of your debt,” Rossman says.
Here are some cards worth a look:
The Chase Slate Visa card (www. chase.com) offers a 0% rate on balance transfers for 15 months (and then 14.99% to 23.74%). You pay no fee on transfers made within 60 days of opening the account. Go to a Chase branch to apply; recently, most customers could not apply online.
The First Technology Federal Credit Union Platinum Mastercard (www.firsttechfed.com) has a shorter 0% introductory window of 12 months. But the rate after a year is a relatively low 6.99% to 18%, and the card charges no balance-transfer fee. You can join the credit union by becoming a member of a qualifying association and opening a savings account; First Tech pays the association fees and makes an initial deposit in the savings account on your behalf.
If a longer 0% period is your priority, check out the U. S. Bank Visa Platinum card (www.usbank.com). The rate is 0% for the first 20 months and ranges from 13.99% to 23.99% after that. The balance-transfer fee is the greater of $5 or 3% of the amount transferred.
The Citi Simplicity Mastercard (www.citi.com) charges the same transfer fee and provides a 0% rate for the first 18 months (then 14.74% to 24.74%). Plus, it imposes no fee or penalty interest rate for late payments.
Think about the number of communication tools you use in a workday. In addition to checking email, you may be logging on to an instant messaging platform, as well as using a project management platform, content management system or another collaboration platform. You probably are asking colleagues and clients whether they prefer phone calls or video chats.
It’s no wonder that when it comes to tracking down a document, or an exchange you had with your direct report last week, you find yourself searching your inbox, Slack DMs and three Google Docs.
All of this interaction is starting to get to us. A recent survey found that 75% of respondents agree that working from home has increased their sense of digital overload as messaging, emailing and videoconferencing have become the primary means of communication. And 74% of workers polled say they now spend most of their day looking at a computer, tablet or phone. A 2015 study published in the “Journal of Business Economics” found that so-called techno-stressors can lead to reduced work satisfaction and burnout.
We know that too much digital communication can sap our productivity and ultimately lead to burnout. So, while that constant stream of information seems like it’s a nuisance, it could actually be hurting your organization, says Mary Lynn Carver, founder and CEO of MLC Strategy Advisors, a consulting firm specializing in communications and corporate affairs strategy. “Air traffic control of content and some hierarchy and strategy related to these channels is critical.”
Putting such controls in place to deal with digital and information overload starts with a few key steps:
Look at what’s being used
It’s a good idea to start with an audit of what your employees are using to communicate — and what’s working for them, Carver says. Do they need all of the features on each platform? Some software companies create bundled programs with many bells and whistles. Those can be overwhelming, she says, with some employees using features regularly and some not at all. Take a look at what your team is using to communicate and collaborate most effectively.
Get feedback
Once you dig into the platforms your team is using, you might be surprised at what you find, says internal communications adviser Johnna Lacey. If you have an enterprise license for one tool and employees find they like something else, they may have adopted it on their own.
That’s a problem, Carver says, because suddenly, your data, proprietary information and other communication may be shared in a platform your team has not vetted. Worse, if the employees using that tool don’t disclose that they are doing so, you have a silo of information only available to a few people. So, ask your team to come clean about what they’re using and why they find those tools effective. With such feedback, you can make good decisions about the tools to use going forward.
Examine best use for each
Once you create a shortlist of the tools you and/or your team needs, look at how they’re using them versus what the tool’s strengths are, Carver says. If people are sharing design collaborations over IM, for example, you might need a more comprehensive tool to manage that function. Typically, these tools are best suited for certain types of communication, she says.
IM or text: Effective for simple questions and to get very specific information relatively quickly.
Email: Good for longer communication that may require more detail than appropriate for a text or IM. Also effective for forwarding documents and providing links for context.
Collaboration platforms: These can be general, such as Slack or Trello, or specific to a work function, such as a project or performance management system along the lines of Wrike or 15Five. They are meant for information and project sharing among many people, as well as gathering feedback. Such platforms may have varied features, but not all of those features may be appropriate or necessary for your team.
Phone and videoconferencing: Better for fluid communication, brainstorming and short-circuiting rounds and rounds of email or IM messages.
Build a channel strategy
Once you align the tools you and your team need with their strengths, you can start to create a strategy for communicating and transferring information. “It’s a fine line between giving people choices and creating efficient systems and universals where you actually are all in sync. I think that it’s really important that you do have a few universal channels of communication that everyone is reliably tapped into,” says Shane Metcalf, chief culture officer at 15Five.
Giving your team guidelines about what information to share where and what the expectations are around how and when to respond can help keep your data and projects in the appropriate places, avoid silos, and help people more efficiently find what they’re looking for, Carver adds. Such strategies will vary from company to company.
Adapt communication style
Another aspect that is a little more nuanced, but still important, is adapting communication style for various platforms. Have you ever gotten a seemingly terse email that caused your stomach to drop when the same brevity of language wouldn’t have made you blink via text or IM? “You need to really think about your audience,” Lacey says. Think about how they will receive the message, as well as the best platform for communicating it, and adjust your communication style and tone accordingly.
It’s also important to be aware that there are four different generations in the workplace now, and people may have different preferences in their style. Some avoid phone calls at all costs, while others like to dial and chat. While those types of individual styles don’t necessarily need to be made into policies, it’s good to remind your team of different preferences.
Be sure to review your guidance periodically to ensure that you’re keeping up with your team’s evolving needs. And stay open to feedback so that you can adapt as needed to help make your team more productive and less subject to the digital onslaught.