While 2020 was a year most of us would like to forget, we still need to look back to get ready for tax time.  COVID-19 presented a host of issues that make preparing for your annual tax appointment different this year.  Here are a few things to keep in mind when getting your paperwork together.

  1. Unemployment Income – if you claimed unemployment in 2020, make sure to obtain a form 1099-G which reports your income and tax withholdings.  You may have to log-in to your State’s online account to retrieve this form if it is not mailed to you.
  2. Covid-19 Retirement Distributions – The CARES Act allowed qualified taxpayers to take distributions up to $100,000 from eligible retirement plans without penalty and elect to include those distributions in income over a 3 year period.  New York just recently adopted this same treatment.  Be prepared to let your CPA know under what provision you qualify.  A qualified taxpayer is someone who is diagnosed, or whose spouse or dependent is diagnosed, with COVID-19 by a test approved by the CDC, or experiences adverse financial consequences as a result of the individual, their spouse, or a member of their household being quarantined, being furloughed or laid off, or having work hours reduced due to COVID-19, being unable to work due to lack of childcare due to COVID-19, closing or reducing hours of a business that they own or operate due to COVID-19, having pay or self-employment income reduced due to COVID-19, or having a job offer rescinded or start date for a job delayed due to COVID-19.
  3. Return of 2020 RMDs – If you were 70 ½ or older and returned part or all of your 2020 RMD before August 31, 2020, please make sure to provide the date and amount of your return.
  4. Economic Impact Payments (Stimulus Payments) – Provide either IRS letter 1444-A which should have been received at the time of the stimulus payments, or your bank statement(s) indicating how much you received for each stimulus.  This information is needed to determine if you are due additional funds.

Honorine M. Campisi, CPA