FALCON HEIGHTS, Minn. — Unless you file an extension, you have until May 17 to file your taxes this year. Questions about unemployment, stimulus payments and working from home have many Minnesotans wondering how this will affect our refund. Here’s some answers from Todd Koch, a partner at JAK +Co Certified Public Accountants.
Kris: 2020 was a year like no other and now the effects are trickling into our taxes. What is the most significant thing you’re telling your clients?
Todd: The most important thing to have right now is patience. If you want to take advantage of all the opportunities in there, you are going to have to take time because of all the changes that are happening.
Kris: First up, unemployment. A lot of people unexpectedly needed it this year, is it taxable income?
Todd: A section of your federal unemployment has become potentially non-taxable. For many years all the unemployment received has been taxable. Now if your income is below $150,000 you can have up to $10,200 of unemployment that’s not taxable.
Kris: So, if that $150,000 income threshold is for everyone, how do married couples or those filing jointly navigate it?
Todd: So now we’re talking to people about should they be filing married or separate because maybe you put their two salaries together and you’re over $150,000, then you have no unemployment that’s not taxable. Where if you file separately you could have $20,400. In other words both of you have a $10,200 exception. Some really unique things are happening right now.
Kris: A lot of Minnesotans received stimulus payments. The IRS knows about them, they’re considered a public benefit, do you have to report them?
Todd: For everybody, these are non-taxable payments. You will not pay tax to Minnesota on them, you will not pay tax to the federal government on them and you will not have to repay monies received.
Kris: And what about full time employees working from home because of coronavirus, can they deduct their home office?
Todd: That depends. For federal, no. For federal purposes as part of tax simplicity, the got rid of all those deductions. But for Minnesota purposes there is an opportunity to take those as an itemized deduction. So, if you itemize for Minnesota purposes, yes, you may have an opportunity to get that deduction.
Kris: So, what you’re saying is it’s probably best to consult with a tax advisor?
Todd: That’s what we’re here for. To help people maximize their return.
