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The CARES Act that came about as a result of COVID brought about several changes to 2020 tax returns. Below is a quick breakdown of a few items…
Monetary donations have long been reserved as a benefit for those who itemize their deductions. However, for 2020 tax returns, there’s an “above-the-line” deduction for those who don’t itemize, allowing up to a $300 deduction for monetary donations in 2020.
Earned Income Credits
For 2020, those looking for earned income credits have more options available to them. That’s because taxpayers can choose to use 2019 or 2020 income figures on their tax return for the Earned Income Credit calculation. This will help some filers qualify who wouldn’t have otherwise received this deduction. And, it may help others qualify for more money than they otherwise would’ve received. So be sure to check out the credit amount using both options (2019 & 2020 income).
Additional Child Tax Credit
Similar to the earned income credit change for 2020, filers looking to get the full child tax credits are able to choose between 2019 and 2020 income for this credit calculation. So those who had higher income in 2020, possibly phasing them out of the child tax credit, can now look at 2019 income for this calculation.
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