The pandemic has been front and center most of this year and it may have tax implications for you. If you collected unemployment compensation from either your state or the federal government, it is all taxable as ordinary income. You will receive a Form 1099-G by January 31 that shows you how much compensation you received and how much tax was withheld. If you’re still collecting unemployment benefits in 2021, consider increasing your tax withholding with your state unemployment office if you owe taxes for 2020.
And if you picked up a side gig during the pandemic, remember to calculate your business-related expenses. Since you’ll be filing Schedule C to report your self-employment income, you’ll be able to deduct related business expenses. If you shopped and delivered groceries to people’s homes, you could deduct the mileage you drove, any parking fees or tolls incurred during your shopping work and a portion of your cell phone bill.