As you know, Congress recently passed a massive new stimulus bill that was enacted into law on December 27, 2020. Most of the public’s attention has been focused on the bill’s authorization of additional stimulus checks, new PPP loans, and other aid targeted to struggling businesses.
But Form 1040 American taxpayers who are not in business are struggling as well. The stimulus bill contains a hodgepodge of eight new or extended tax breaks intended to help Form 1040 filers.
None of these tax breaks are earthshaking by themselves, but together they add up to a nice tax present for COVID-19-weary Americans.
Here are the eight new tax breaks that can help you:
1. Deduct cash contributions to charity if you don’t itemize.
2. Deduct up to 100 percent of your adjusted gross income (AGI) as a charitable deduction.
3. Lengthen to one year the time you have to repay your 2020 employee Social Security taxes if your employer deferred them.
4. Deduct medical expenses in 2021 using the now-extended 7.5 percent of AGI floor for these deductions.
5. Carry over unused flexible savings account (FSA) funds to next year.
6. Use your 2019 income to qualify for the earned income tax credit and/or the child tax credit if you’re a lower-income taxpayer.
7. Deduct out-of-pocket expenses for personal protective equipment (PPE) if you’re a teacher.
8. Take advantage of the lifetime learning credit in 2021 if you’re a higher-income taxpayer.
Learn how Sterling Tax & Accounting can add value to your business!
Your virtual accounting and technology experts providing back office, compliance & strategic solutions for busy professionals.