Filing 2020 Taxes: Your Go-To Guide

Updated for Tax Year 2020


OVERVIEW

Whether it's the extended tax deadline, or expiring credits and deductions, we bring you everything you need to know to file your 2020 taxes with confidence.


For information on the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, the second coronavirus relief package signed into law on December 27, 2020, please visit the “New Coronavirus Relief Package: What Does it Mean for You and a Second Stimulus Check” blog post.


 

Deadline for filing and paying your taxes

There is one key piece of information that every taxpayer — especially those who will be filing at the last minute — should keep in mind as April 15, 2021 draws near:

The deadline for filing 2020 returns is midnight on April 15, 2021.

It also applies to the deadline for requesting an individual return tax-filing extension and for making 2020 IRA contributions.


The deadline for filing 2020 returns is midnight on April 15, 2021.


Cost-basis reporting no longer up to the taxpayer

Starting back with the 2011 tax forms, brokers or custodians of a person’s assets began tracking and reporting to the IRS the cost basis of those investments. In the past, it was up to the taxpayer.

The federal government established new tax reporting requirements with the Emergency Economic Stabilization Act of 2008, said financial adviser J. Mark Nickell of Brentwood, Tennessee-based J. Mark Nickell & Co. Its purpose was to get investors to accurately report on tax forms any gains and losses on securities. The changes will eventually simplify tax preparation for investors, Nickell said.

The effects of this legislation emerged in phases through 2014. For tax year 2012, custodians started reporting costs on covered and non-covered securities. For 2012, they also reported costs involved with mutual funds, exchange-traded funds and dividend reinvestment plans. In 2013, they started reporting on fixed-income options and other securities.

“In the past, the custodians of your assets reported how much a sale was for, but they wouldn’t have listed the cost basis,” said financial planner Chris Walker, also of Brentwood-based J. Mark Nickell & Co. “It was up to the taxpayer to dig through their records, sometimes going back years to find out how much they paid for it.”

Standard mileage rates down

The standard mileage rate for  business use of a car, van, pick-up or panel truck is 57.5 cents for 2020. If  the vehicle is operated for medical reasons, the rate is 20 cents a mile for 2020. The rate for using a vehicle to provide services to charitable organizations remains at 14 cents a mile.

Homebuyer credit restriction and repayment

If you claimed the first-time homebuyer credit for a home bought in 2008 you must generally make the 12th of 15 annual repayment installments on your 2020 return.  Separately, a repayment requirement also applies where you purchased a home and claimed the credit on a prior year return and then sold it or stopped using it as a main home in 2020.

Savings accounts for medical, and capital gains/losses

The additional tax on distributions from health savings accounts (HSA) not used for qualified medical expenses has increased to 20 percent, and payments for medicine are now considered qualified medical expenses only if the medicine is a prescribed drug or insulin.

In most cases, taxpayers will now use the new Form 8949 to report capital gain and loss transactions. Schedule D, the form traditionally used to show these individual transactions, is now used as a summary sheet, reporting amounts for total sales price, basis and other adjustments for all individual transactions, and for figuring the tax.

Health insurance deductions

Eligible self-employed individuals may take a self-employed health insurance deduction in 2020. This deduction may be used not only for health insurance premiums that cover the filer, but also for spouses and other dependents as well as non-dependent children under the age of 27.

Get every deduction you deserve

TurboTax Deluxe searches more than 350 tax deductions and credits so you get your maximum refund, guaranteed.

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