5 Sneaky Things COVID-19 Might Do to Your Tax Bill
Letâs start with your work-from-home setup.
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Updated Mar. 10
Staying home for months on end has taken a toll on everyone, but it can also take a toll on your tax return. Here are five unexpected ways the pandemic could affect your taxes â and what tax pros say you can do about it.
1. Home office headaches
You may already know that living or working in another state could mean having to file more than one state tax return, but working remotely doesnât mean you automatically get to write off your home office. The home office deduction is typically only for self-employed people. That means if youâre someoneâs employee, this tax break is likely a no-go â even if your company sent everyone home because of COVID-19, and even if your company didnât reimburse you for that office chair, printer or paper you bought, says Dina Pyron, the Global TaxChat Leader at Ernst & Young LLP.
Watch Out for These COVID-19 Tax Surprises
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5 Sneaky Things COVID-19 Might Do to Your Tax Bill
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It’s the time of year to start thinking about taxes but the upcoming filing season is going to be a bit trickier for many Americans due to rampant unemployment, working from home and general upheaval due to COVID-19.
Here are a few pandemic specific conditions good and bad to be aware of.
UNEMPLOYMENT
Unemployment benefits are taxable income, which tax experts say may surprise some filers.
Workers are not required to have federal taxes withheld from their benefit payments. While people have the option to have the tax withheld, many do not.
It’s worth noting that unemployment benefits are all subject to federal taxes but not all states tax it.