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- All right, so 2020 might go down as the weirdest year ever
but it also might go down
as the most complicated tax year ever.
Thankfully, Lisa Greene-Lewis, CPA and Turbo Tax expert
is here with us to talk us through it.
And Lisa, throw in the American Rescue Plan
that was passed in early March,
and now people don't know which way is up.
So let's start with what's new that I need to worry about
for my 2020 tax return.
- Well, most of the American Rescue Plan
is related to your 2021 taxes.
First, I'm gonna call out what was new for 2021.
A third round of stimulus payments was issued.
There was also expanded unemployment of $300
until September 6, 2021.
Expanded child tax credit,
as well as expanded earned income tax credit.
And also some exclusion of student loan debt
for 2021 through 2025.
Now, what's new and retroactive for your 2020 taxes
is there is relief if you received unemployment income.
For your first $10,200 of unemployment income,
that will be tax-free for 2020.
And that's if you earn up to $150,000.
And then if you're married, filing jointly,
that amount goes up to $20,400.
Now, one thing to note, there were people that already filed
before the American Rescue Plan was passed.
And the IRS says the people that already filed,
if they were taxed on their first 10,200 of unemployment
or 20,400 if they're married, filing jointly,
there's nothing they need to do.
The IRS is gonna make those adjustments on their taxes.
- We're trusting the IRS to do that, huh?
But there's also credits and things that people
actually need to potentially amend themselves.
And I know we're gonna talk
about amending your tax return in a different video,
but just quickly,
there are things that people need to be aware of
that may need to be changed if they filed.
- Yes, so because the first 10,200
of unemployment income is gonna be tax-free
or 20,400 if you're married, filing jointly,
you may be eligible for some credits and deductions
that are based on your income.
So like the earned income tax credit
or some of the child tax credit.
Those, you may have to make an adjustment on your taxes.
- Yeah, so it's really important
that people get a handle on this.
And if nothing else, try to do a little legwork on it.
I know the Turbo Tax website has a ton of stuff on it.
There's places people could go, right?
- Yeah, so if you have any questions,
we have up-to-date information.
We're consistently updating daily
on our coronavirus tax center on the Turbo Tax blog
and on the self-employed coronavirus relief center as well.
- And Lisa, tell us about this premium tax credit.
- Another provision that was retroactive to 2020,
if you were responsible to pay excess premium tax credits,
the IRS is waving that excess.
They know that when you went to apply
for a subsidy in the marketplace
because of everything that happened in 2020,
it may have been hard to project your income accurately.
If you didn't project your income accurately,
and say you earn more income than you projected
to get that subsidy,
typically you have to pay that subsidy back,
but now the IRS, they just provide a guidance
that they are waiving that excess that you have to pay.
- Lisa, there's so much new for 2020.
Where does the taxpayer go for help?
- The Turbo Tax has proactive guidance
related to the events that occurred in 2020.
But if you have questions, you could connect live
via one-way video to a Turbo Tax live tax expert.
They can either guide you along the way,
or new this year, you can fully hand over your taxes,
sit down all from the comfort of your home.
- Lisa Greene-Lewis, CPA, Turbo Tax expert.
Thank you for the update.
And everyone needs to keep on top of this
because it's just fluid and it consistently changes.
Thank you, Lisa.
- Thank you.