Whether you lost your job, saw a big pay cut, took on a side hustle, used up your emergency fund, or even racked up a ton of credit card debt in 2020, remember you are not alone.
“Great job. you did it,” said financial planner Jen Grant of Perryman Financial Advisory, Inc. “If you actually ran through your emergency fund this year, good job. You had one. You had something to fall back on. It helped you get through this time. Maybe it’s not perfect, but you made it."
Though the pandemic isn't over yet, it will end.
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You can now start sweeping up the financial mess of last year and start planning for recovery. Whether it's plotting a new career path or figuring out a way to start saving money again if you're able.
“We do what Americans have been doing since we broke away from the British – and that is to get back up and keep fighting,” said CPA Matthew Gold of Carr, Riggs and Ingram in Dallas. “It was a setback, but it wasn't the end; we have to go forward."
The COVID-19 pandemic resulted in new laws and changes to other laws as part of coronavirus-related stimulus efforts.
If you took advantage of any of these programs, they could affect your 2020 individual tax return, business tax return, or both.
"What the government did in its best efforts is to try to find a way to stimulate and keep your cash flow coming,” Gold said.
Your Stimulus Payment
The economic impact payment you received in 2020 is a refundable tax credit – and if you never received it, you can claim it.
Your Retirement Plan
The CARES act allowed you to take an early withdrawal of funds from your 401(k), for specific coronavirus-related reasons -- without having to pay a penalty.
You can spread out the tax penalty over the next three years.
Or pay it back early if you have the means to.
And if you had any medical bills related to COVID-19 -- you don't have to worry about deducting those on your taxes.
Some private insurers have agreed to waive payments for COVID-19 treatment for insured patients.
And even if you don't have insurance, your COVID-19 treatment should also be paid for.
Some providers might still send you a bill, but you should dispute it.
Talk To a Professional
2020 taxes are layered and complex. If anything is unclear, or too difficult to handle on your own -- call a professional financial planner or tax pro.
This year’s income tax filing deadline is Thursday, April 15, 2021.