Guest Commentator: Dr. Janet Massey, Professor and Director of Major in Accounting, Neumann University, @NeumannUniv

With tax season underway, how is COVID-19 impacting 2020 tax filings?

Here we go, the start of another tax season, which at times, leaves people cringing. COVID-19 certainly has been identified as a health crisis, but in many ways, it has also been a financial crisis. It is important for you to file your 2020 taxes as soon as you possibly can since the IRS uses the most recent tax filing to determine any relief payments you may be eligible for under the coronavirus relief packages. If you did not get the full Economic Impact Payment, this is another reason you should file your 2020 tax return early since you may qualify for the recovery rebate credit, but to get that you must file your 2020 tax return. Learn more at Get my payment.

Because of the business shutdowns and the loss of jobs, many Americans are now receiving unemployment compensation. These benefits are taxable and must be reported on your 2020 federal income tax return. Also, any benefits that you may have received under the CARES Act related to special unemployment compensation would also be taxable on your 2020 federal tax return. You may also want to look into the particular requirements under the CARES ACT for special distribution options and rollover rules for your retirement plans and your IRA’s. In some instances, qualified individuals can take a penalty free retirement plan distribution. If this is important to you, read this IRS article to learn more. In addition, the SECURE Act includes reforms to the required minimum distribution age (RDMA) rules, which used to be age 70 ½ and are now age 72.

Another consideration many should look at are the individuals who are temporarily telecommuting and working from home, which could impact your state and local income taxes. For example, if you lived in Delaware County and worked in Philadelphia you were paying a city wage tax. If you are now working from home and not commuting into Philadelphia, the wages on the days you are not at the office are not subject to state and local income taxes. If this affects you, check out Telework during COVID 19.

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