It’s tax time again. Here’s what you need to know to close the books on 2020

We can’t close the books on 2020 until we close the books on 2020. It’s tax time again, and if you were a work-from-home employee last year, it’s time to figure what you can write off and what you owe to the taxman.

The short answer: If you were a W-2 employee in 2020, prepare to eat the expenses for that newly converted home office. That means no federal deductions for printers and paper and other office supplies, desks or chairs and other office furniture purchased last year.

“A lot of folks are upset,” said Rhonda Collins, a Florida-based certified public accountant and director of tax content at the National Association of Tax Professionals, or NATP. With the rising costs tied to the ongoing pandemic, people “are spending more than they normally would and there are incoming expenses that you’re not being reimbursed for.”

The rules changed beginning in tax year 2018 with the federal Tax Credit and Jobs Act.

Prior to 2018, expenses such as professional licenses and dues, supplies, business travel and meals could have been claimed as itemized deductions on IRS Form 2106 — employee business expenses — to the extent they exceeded 2% of the taxpayer’s adjusted gross income, Collins said.

But those employee business expenses can no longer be claimed as itemized tax deductions on the individual federal income tax return.

“The timing was not great. Employees are not able to deduct as they had in the past,” said Riley Adams, a San Francisco-based certified public accountant whose “Young and the Invested” website offers personal finance advice to young adults. “Even if they exclusively work from home, they won’t be able to claim that.”

Travel expenses as deductions

Collins of the NATP said, in light of the pandemic, employees may want to ask their employers if they have an accountable plan of which items qualify for reimbursement to reimburse workers for out-of-pocket business expenses.

But there’s better news for independent contractors, Adams and Collins say.

If you work from home, but travel as part of that work, expenses could be deducted on your 1099 form, Collins said. Business income earned and expenses paid should be reported on your Form Schedule C-Profit or Loss from a Business.

The National Association of Tax Professionals will host a Schedule C webinar March 23-24.

And because independent contractors are often not reimbursed by their companies, wrote Adams for Kiplinger last fall, those workers may be able to take advantage of self-employment tax deductions and claim expenses such as depreciation on some property and utilities.

More employees appear to be claiming standard deductions due to the new limits on itemized deductions, Collins said.

The 2020 standard deduction is $12,400 for single filers and married but filing separately. For married couples filing jointly and surviving spouses, the deduction is $24,800. Heads of households can take an $18,650 deduction.

But you don’t have to navigate tax season by yourself, especially if your tax status changed in 2020.

“If your filing status changed and you’re not sure where to turn, get a tax preparer who is qualified,” Collins said. The National Association of Tax Professionals represents some 22,000 tax professionals nationwide.

Collins has a few tips.

Find a tax preparer

Consumers should look for “someone who is going to not only prepare your returns but ask the right questions, someone who is proactive, not reactive,” she said.

If you file using Turbotax or other tax preparation software, don’t simply file. Once you’ve completed your work, print it out and have a tax preparer look it over first.

Take all of your documents with you when you meet with a tax preparer: “Awareness is key,” Collins said. “If something doesn’t feel right, ask questions.”

Talk with your employer: “It never hurts to ask your employer, ‘Is this reimbursable?’” Collins said.

Save your receipts: “There are a lot of refundable credits this year,” she said.

The Internal Revenue Service began accepting tax returns Feb. 12 but the standard April 15 due date remains the same. Filers can apply by April 15 for a six-month extension to push the due date to Oct. 15. But filing the Form 4868 extension does not extend the time to pay your taxes. You will still owe interest if you miss the regular April due date and could be charged penalties.