Important Highlights to Remember

We have made a list with the most important highlights to keep in mind for your US tax return:

• The tax filing deadline is 15 April 2021, which falls on a Thursday. You must file your returns by this date;
  

• The personal exemption remains at USD $0 as it was in 2019;
  

• The standard deduction for 2020 is increased to $12,400 for single and $24,800 for married couples filing a joint return;¹
  

• The Economic Impact Payments or stimulus checks don't count as taxable income; and
  

• For 2020, we will file Form 1040 for you, but if you were born before 2 January 1956, we can file Form 1040-SR instead for you.
  

Economic Impact Payments

A recovery rebate credit was paid out to eligible individuals in two rounds of advance payments called Economic Impact Payments (EIP). These were paid based on your 2018 or 2019 tax information.

Any EIP you received are not taxable for Federal income tax purposes, but they reduce your recovery rebate credit. If you did not receive full or partial amounts of the EIP, we can claim the recovery rebate credit on your 2020 form 1040 or 1040-SR.

Other Taxpayer Relief

Recent changes provide individuals with certain tax-related benefits. For example, you can now elect to use your 2019 earned income, to estimate your 2020 earned income tax credit or additional child tax credit.

Educator expenses incurred after 12 March 2020 for personal protective equipment, disinfectant or other supplies used to prevent the spread of coronavirus.

Charitable Contributions Used as Tax Deductions

A new deduction is allowed from 2020 for non-itemizers. This means that taxpayers who claim standard deductions may qualify to take deductions for charitable contributions of up to USD $300 ($150 if you are married and filing separately)!²

Coronavirus Relief for Retirement Plans and IRA’s

• The Coronavirus Aid, Relief, and Economic Security Act (also known as the CARES Act), waived the required minimum distributions (RMD’s) from retirement accounts for 2020.³ This means that you are not required to have been affected by the coronavirus to waive your RMD for 2020;‍
  

• You can take distributions from your retirement accounts up to a combined limit of USD $100,000; ⁴
  

• The tax for the withdrawals will be spread over a three year period with no additional 10% penalty on early distributions;
  

• You may re-contribute all or part of your distributions to an eligible plan within three years and you can claim a refund for any income taxes paid on the amount previously withdrawn.‍

Standard Mileage Rates

If you have used a car for business in 2020, the rate for business use of your vehicle is USD 57.5 cents a mile. The 2020 rate for use of your vehicle to get medical care or to move is USD 17 cents a mile.

Identity Protection Personal Identification Numbers

New Identity Protection Personal Identification Numbers (IP PINs)⁵ are generated every year. These will be sent out by mid-January 2021. Use this IP PIN on your 2020 return as well as any prior-year returns you file in 2021.

Taxably Helps with U.S. Tax

If you want to be sure to have the latest information on hand relating to these payments and its impact on your tax return or if you have any questions about your US tax duties, send us a message on Facebook, or fill out our contact form if you would like us to get in touch.