As December looms and 2020 comes to a close, this memorable year has left the country with record unemployment and many trying to make the best financial decisions. One financial expert gave CBS News tips and offered reminders and tax-saving moves to consider making before Dec. 31.
Economic Stimulus Checks Are Not Taxable
If you were given a stimulus check this year due to the coronavirus pandemic, it will not be taxed, says CBS News business analyst Jill Schlesinger.
Unemployment Checks Are Taxable
Schlesinger says that if you were one of the millions who were unemployed this year, the check you have gotten either on a federal and/or state level is taxable. She says to go to IRS.gov and go to the withholding tax estimate calculator to see what you will owe in April when taxes are due. She also says there are options where you can pay it all now at once.
What to Do If You Work Out of State
Schlesinger said it is a “particular quirk of this recession,” that some people working from home may have lived in a state that was different from the state in which their office was located. She says to “compile the number of days you worked in your primary location,” then check on the local and state income taxes and adjust withholdings.
This also works if you moved within the state, she said. For example, if you have New York City as your primary residence but moved upstate, then you don’t potentially have to pay New York City taxes. She adds to still check with local officials on a proper plan of action.
No, You Can’t Write Off Everything For a Home Office
A 2017 tax cut erased the standing for an employee to deduct the home office expense, Schlesinger says, as well as any miscellaneous business expenses. However, she says if you are self-employed or a “gig worker,” you may be able to deduct your rent, mortgage, or some household expenses that you use for work. However, these deductions must comply with IRS rules. But she noted to not "say everything is for office use,” because that could trigger an audit.