Tax season 2021 begins: How stimulus checks, unemployment payments, deductions will impact returns

Tax confusion is being caused by the COVID-19 pandemic. CBS News business analyst Jill Schlesinger explains what people can deduct and what payments are taxable in 2020 returns.

Video Transcript

[MUSIC - DNA WITH SUZANNE VEGA, "TOM'S DINER"]

- In this morning's "Eye on Money," we are looking at tax filing confusion caused by the pandemic. Now, tax season traditionally starts in the last week of January. But this year, the IRS begins accepting and processing individual tax returns today.

Now, the agency says the delay is caused by late changes in the tax law. The deadline to file is the same though, that is April 15. "CBS News" business analyst, Jill Schlesinger, joins us now. Jill, good morning to you.

A lot of different categories of filers this year. One in particular comes to mind first. 160 million Americans or thereabouts got a stimulus payment last year. Is that taxable?

JILL SCHLESINGER: That is not taxable. So good news, right? So if you got $1,200, or $500 per kid-- maybe you were one of the few people who got that extra $600 at the end of December. That's not taxable.

But here's what's really important. A lot of people said they were missing their stimulus payments, or they got less than they thought. Maybe they had a child, and the IRS didn't know that.

If that's the case for you, you are going to file your taxes. And you are going to focus on-- ready for this-- line 30 of your form, because that's the recovery rebate credit. If you think you are due money, focus on that. Make sure you fill that out. And be sure that you get the money you're due.

- All right, very good to know. Stimulus payments, not taxable. What about the 22 million Americans who were unemployed at some point last year, and they got unemployment money? Is that taxable?

JILL SCHLESINGER: That is taxable. Unemployment benefits, whether it came through the CARES Act, whether it came through your state of residence, totally taxable. Now, some people had withholding. That's good.

But on the federal level, unemployment benefits are taxable. Here's something else to remember. There are actually 15 states that do not levy tax on unemployment benefits. Check to see if you're on this list, because then, you might be able to avoid it.

But unfortunately, unemployment is seen as income, taxed as income. I guess the only good news is you didn't get taxed like in the FICA sense. You didn't pay into social security on these dollars.

- OK now, if you were lucky enough to keep a job, many, many, many millions of Americans have been doing that job from home, since basically March of last year. Does that mean they can write off the portion of their home they're using as an office?

JILL SCHLESINGER: This is probably the most frequently asked question that I got last summer when people were filing their taxes on an extension. Here's the deal. In 2017, we had a new tax law. And it basically said, no office deduction for anyone who's an employee, if you're a W2 wage earner.

You can deduct a portion of your residence or your rent if you are self-employed. You've got to use one room or a part of your house on a regular basis. And you can't have another office somewhere else.

So the rules are pretty tight. Again, if you are a W2 wage earner, sorry. You paid for that stand up desk and the new chair all on your own.

GAYLE KING: Jill, the IRS is warning about some kind of unemployment tax scam. I got a fishy call the other day. And as I was giving my ZIP code I go, I wonder if I'm being scammed at this particular moment. What is-- what is the scam you're talking about?

JILL SCHLESINGER: This is an awful scam. It's basically fraudsters stealing your-- your social security number and filing unemployment benefits on your behalf, collecting those benefits. You won't know this happened unless you get a form 1099-G from the government.

Now, here's the thing. This happened to my sister. She gets notified, says hey, here's your form for the unemployment benefits that you collected. She goes, I was employed all of last year. What happened?

You've got to notify the state. You've got to get a revision. You probably should also get a tax ID protection from the IRS when you file-- an IP protective code, a PIN. Because this could mean your social is out there, anyway. And you'd want to prevent against fraud with your federal returns.

GAYLE KING: All right, you've always got good advice.

- Yeah, we appreciate it, Jill. Really good information, not all of it bad either.

JILL SCHLESINGER: No.

- Thank you, very much. And if you have additional questions for Jill on taxes, you can head to our "CBS This Morning" Facebook page, where she will be answering your questions directly. I have one. What if there's a studio in your basement, you do TV out of there every now and then, is that tax deductible? Meet me on Facebook to find out.

- Good luck.

GAYLE KING: I think the answer might be nah.

- I think so.