SAN JOSE (KPIX 5) — With the IRS filing deadline now a month away, many Bay Area taxpayers are navigating some of the most unusual circumstances for tax preparation in recent memory.
While millions of Americans dealing late stimulus payments, receiving unemployment benefits and asking questions about deductions for home offices, the IRS has so far not announced a postponement of the April 15 deadline.
Caroline Chen, assistant professor of Accounting and Finance at San Jose State, and a former IRS attorney, said the agency is likely mindful of the struggles that the country endured over the past year.
“Given the pandemic, and depending on the type of problem that you have with the IRS, I wouldn’t say that the IRS would necessarily be more forgiving, or more compassionate. However, I think that they would be more understanding of particular situations,” said Chen.
One of the most asked questions about filings this year are regarding expenses incurred working from home, and schooling children from home.
For employees of companies, expenses such webcams, lighting, noise-canceling headphones, desks, and high speed internet are not deductible. The same goes for desks, school supplies, and electronics for students.
“Congress changed the law couple years ago that for 2018 through 2025 unreimbursed employee business expenses are not deductible,” said Professor Annette Nellen, the director of the SJSU Graduate Tax Program, and a former revenue agent and lead instructor at the IRS.
Self-employed taxpayers can still claim the home office deductions. But California law does stipulate some financial help for employees with work from home expenses.
“In California, our labor law says that the employer is required to reimburse the reasonable expenses of their employees,” said Nellen.
Many taxpayers are still reporting delays in the first two stimulus checks from 2020. According to Nellen, would-be recipients should still claim the stimulus payments on line 30 of Form 1040, dubbed the “Recovery Rebate Credit,” using the corresponding worksheet. Doing so would trigger the IRS to process the payment.
“That’d be the only way to get it now. The IRS is no longer issuing the checks for the first two for 2020. Those have to be claimed on the 2020 tax return that you file, Form 1040,” said Nellen.
Rachel Dominguez did just that three weeks ago, but so far has heard nothing from the IRS. Dominguez came to the agency office in downtown San Jose to resolve the issue and get the $1,800 stimulus money.
“They told me to call and make an appointment,” said Dominguez. “I could feed my family. I could make a car payment. I could pay my insurance. I could pay my rent.”
Another issue regarding stimulus payments: dependents who were claimed in years prior to 2020 could qualify for the money.
“If somebody like, say a college student, was being claimed as a dependent on their parents return for 2018 or 2019, but in 2020 they don’t don’t qualify as the parent’s dependent. And, you know, they might not have any income; they should file a return. They could also get those payments,” said Nellen.
Also, under Biden’s stimulus plan passed last week, the first $10,200 of unemployment benefits received will not be taxed, for individuals making less than $150,000 last year.
“So that is actually fantastic news. Because under federal law, unemployment benefits are normally taxed. So this is really mindful of the fact that so many people are in a precarious financial position,” said Chen.
Chen also works with Tax Aid, a volunteer organization comprised of accountants and other tax professionals who provide free tax preparation services for individuals who earn less than $57,000 a year. For more information, go to tax-aid.org.