How the pandemic will affect your taxes

Finance expert Chris Hogan on what you should know as you file your taxes this year.
4:48 | 03/05/21

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Transcript for How the pandemic will affect your taxes
We'll turn now to a subject that affects all of us, filing taxes. Whether you lost your job, or you're collecting unemployment, or you're working from home, or if you started a new business, we know that the pandemic has changed a lot of things for people this past year and that is absolutely going to affect how we file our taxes. So we brought back one of our favorite financial experts to guide us on what we need to know when filing your taxes this year from Ramsey. So please welcome back Chris thanks for being with us. Thank you. We just posted and talked about all the things that have changed for so many people. What do we need to know this year about filing taxes after the year we just had. 2020 was a tough year. I know we all want to put it behind us. But there are a few things we need to know about the upcoming tax season, Thursday, April 15th, 2021, is the day that you have to have your taxes filed, unless you file the necessary extension. But we also need to be aware that the standard deductions and income brackets have all been adjusted. The income brackets have been adjusted to account for inflation. So you really want to double check and understand what you can deduct and where you fall. Chris, a lot of people are working from home this year, they weren't going to the office. Can you talk about the differences when you're filing your taxes between someone who's a self-employed person versus someone working from home. This is so important because a lot of people were sent home to work. But we need to understand that difference. If you're truly self-employed and you work from home, there are a lot of deductions that you can use for your home office. So you definitely want to talk to your tax professional to understand what you can deduct and the travel expenses. However, if you were sent to work from home, this is totally you can't take the deductions of a self-employed person, but you may have had some real expenses while you were working from home. What I'm advising people to do is to get a list of those expenses, talk to your employer about potentially being reimbursed for those, but don't do that on your taxes, that would be an issue. Okay, that is a very important note there. There are also a lot of things that you want to talk about because so many people's circumstances have changed. In fact, you say there are four big areas that everyone needs to know about that will affect your taxes. What are they? Well, the first one is, there are four big areas, the first is stimulus checks. A lot of people received stimulus checks, and there's always been the question, am I going to have to pay taxes on this or not? I want to help everyone understand. You don't owe taxes on the stimulus check. It's being treated like a refundable tax credit. You want to be aware of that and understand it's not anything that's going to impact your taxes or impact your refund. What's the next one? Well, the next one is, as you're looking at it, we had a lot of people dealing with up employment. At one point in our country, Amy, we had almost 54 million people unemployed. So they had to take advantage of unemployment benefits. The thing you need to understand with unemployment benefits is, if you didn't have taxes taken out of that as you got the check, you're going to owe taxes on the unemployment after the fact. So this is something that is taxable. You want to be aware of how you had it structured, but more importantly, working with a tax professional to understand how much in unemployment benefits did you receive and how much potentially do you owe in taxes if you didn't have them withheld. The next one is regarding retirement plans? The C.A.R.E.S. Act, I tell people all the time don't take money out of your 401(k)s or 403bs but some people did. If you did this you need to really prepare yourself for the tax bill associated with that. I want people to remain calm and understand this. You have three years to replace that money. A lot of people are aware of that. If you pulled money out of a retirement plan you actually have three years to be able to replace that money. However, you'll need to be able to be aware of the taxes due in the upcoming year, but you can also, in that three-year period file an amended return to potentially offset the tax bill moving forward. That is very good to know. A lot of people doing some side hustling this past year. Yes, yes, they did. They did side hustles to bring in extra income and a lot of people did two, three or more of those. However, we need to be aware that income is tax at your normal tax rate. So you need to be aware and do accounting and understand how much money did I bring in from side gig one, two or three, you want to be prepared for that and understand you have to pay taxes. Chris hogan, thanks for your expertise. I could listen to you all day

This transcript has been automatically generated and may not be 100% accurate.

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