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Minneapolis St. Paul News, Weather, Traffic, Sports | Minneapolis, Minnesota | kare11.com

Take KARE of Your Money: Saving money on taxes during the COVID pandemic

Keeping track of deductions this year could save you thousands of dollars. Keep those receipts.

MINNEAPOLIS — It's everyone's favorite time of the year, tax season.

And this year’s tax season is even more confusing than most.

At KARE 11, we’re constantly getting questions from viewers regarding this year’s tax returns.

We set out to answer some of the most commonly asked questions.

Scott Kadrlik at Meuwissen, Flygare, Kadrlik and Associates was kind enough to lend us his expertise.

Can I claim the computers, books, and office furniture I purchased to help my kids do distance learning this year?

"There is a deduction on your Minnesota return for educational expenses that you incur to teach them at home,” Kadrlik says.

Parents can claim both an education tax credit and an education deduction.

Kadrlik says the credit only goes out to lower income families that qualify.

To see if you qualify, click here.

The deduction, however is available for everyone.

For grades kindergarten through 6th grade, parents can claim up to $1,625 in deductions per child.

For grades 7th through 12th, parents can claim $2,500 per child.

"These have to be school supplies that you truly needed to teach them while they are at home," Kadrlik says.

So, if you bought your child a new a laptop, office chair, books, or anything else education related, save those receipts.

For a list of qualified deductions, click here.

How about that home office you set up so you can work from home?

Kadrlik says chances are you won’t be able to claim any of those expenses on your federal taxes.

“As of right now, in order to get a home office deduction, you need to be self-employed. You need to use that home office exclusively and regularly for your own business,” Kadrlik explains.

If you work for a company and you normally go into the office, but suddenly find yourself working at home these days, he says you don't qualify for any sort of federal deduction.

But you might be able to get a deduction on your state taxes.

If you itemize and you spent more than 2% of your annual income on setting up your home office, Kadrlik says you might qualify for a deduction.

However, Kadrlik says very few people meet these requirements, so chances are you won't be able to qualify for any sort of deduction for your home office this year.

How about people who had to claim unemployment for the first time? Do they have to pay any taxes on the money they received in 2020?

"Unemployment benefits are taxable and it will be included in their income this year,” Kadrlik says.

The IRS gives people who received unemployment to either pay the income tax right away or to wait until later.

Kadrlik says people who have already paid that income tax are in the clear, but if they haven’t paid yet, that money will be owed when they file their tax return.

Do you have to pay taxes on the stimulus payments?

"The stimulus payments are NOT a taxable item,” Kadrlik says.

So, you won't have to pay any taxes on those stimulus payments, but the stimulus payments will show up on your return.

If you're owed money, say you welcomed a new child, or your income went down in 2020 and you suddenly qualify for a stimulus check, Kadrlik says those payments will be added on to your tax refund, or will be subtracted from the amount of money you owe to the IRS.

If you still have questions, check out the IRS website.