Like everything else, taxes will be like no other year

It’s the time of year to start thinking about taxes — but the upcoming filing season is going to be a bit trickier for many Americans due to rampant unemployment, working from home and general upheaval due to COVID-19.

Here are a few pandemic specific conditions — good and bad — to be aware of.

Unemployment

Unemployment benefits are taxable income, which tax experts say may surprise some filers.

Workers are not required to have federal taxes withheld from their benefit payments. While people have the option to have the tax withheld, many do not.

It’s worth noting that unemployment benefits are all subject to federal taxes but not all states tax it.

Relief checks

As part of the CARES

Act, a relief package passed early in the pandemic, millions of Americans were given payments of $1,200 per adult and $500 per child. At last count, the IRS said 160 million payments totaling about $270 billion have been delivered by direct deposit, paper check or prepaid debit card.

That money is not taxable. However, what many people do not realize is that the money they received is actually an advanced payment on the Recovery Rebate Credit for 2020 tax filers, said Dina Pyron, Global TaxChat Leader at Ernst & Young.

As such, people who did not receive their payment or only got a partial payment can resolve this issue on their 2020 taxes when they file. If you were overpaid, you will not owe.

Also, if you did not get a relief check because your income was too high, but it has since fallen in 2020 and made you eligible, you also can get the payment via this credit.

Working from home

Working from home became the norm in 2020 for many people, but most won’t likely be able to claim expenses for their new workfrom-home setup.

The home-office deduction can only be taken by businesses or the self-employed. The tax law enacted in late 2017 did away with the ability of employees to claim any unreimbursed employee expenses, at least until 2025. Some states may allow people to deduct unreimbursed employee expenses though.

Charity

One bright spot is a new, temporary deduction for charitable donations.

As part of the CARES Act, taxpayers can deduct up to $300 for cash donations given to charity even if they choose to take the standard deduction, rather than itemizing their deductions.