2020 is a milestone year for many reasons, but it’s also been a completely unpredictable one. The economy is down and there’s a surplus of job losses. Many businesses are failing and due to this the rise of work from home jobs has skyrocketed. Aside from being a stable way to make some money, this is a great option for newly unemployed people that need income. To clear through this juncture, here are some things you have to keep in mind before filing your taxes. .File Early. Tax laws change every year, and what you might think is a loophole in the current tax code could be closed off by the end of this year. It’s best to file your taxes as early as possible so that you’re sure to get your refund and won’t have to worry about any changes in the future.
But say you saved up your money on essential and enterprising to move back home because the cost of living there is way cheaper. But now your salary is the same but taxed differently .You move down to Georgia, where the cost of living is lower but your salary has gone up. After taxes, you make a little more than you did when you were in New York.Now that your $60,000 salary is taxed in two different states, it’s only worth $54,000 after taxes.
Let’s take statistics into count.
Consider you early 50,000 per month of which you spent 20,000 on miscellaneous.
The tax you paid per month in the past year would be 30,000 minus the payable tax.
This year, since you saved up 50,000 and haven’t spent any of it yet, you would have to pay 50,000 minus the tax which is a higher amount compared to the taxes you paid last year..But the government has taken measures to restore allowances – with a basic deduction for the employed – since it was classic to fit into society.
You won’t be able to claim tax exemptions such as leave exemptions; house rent allowance, travel exemptions because they don’t count at least for now
But how does this work?
If you’re receiving rent money, you can potentially exempt it from your income. You will have to estimate what percentage of the total amount is going toward mortgage payments.
Let me also tell you how this affects.
It sounds like taxes are a big problem for you, since the new tax liability has decreased your yearly costs. It’s unfortunate that this is also a great loss in terms of federal deduction.
But don’t forget the house resources you left behind and the rental part that you have paid to your landlord. If not, you’ll be charged when checking out. Submit these documents to HR and if not – You will be liable to do so later on
Allowances:
There are some basics that are free from the income tax. Mobile charges, internet, self-learning, up-skills and the internet for just what you actually spend on them. .The value of the taxable allowances is restricted to Rs 10,000 in case of a married person and Rs 5,000 in case of everyone else. If they spend more than this amount then their entire expenditure is treated as taxable.
Your leave allowance will be tax free if you have spent three times the allowance.
Recently, new restrictions have been placed on the exemption for travel and travel related allowances. This is also widely quoted as “work from home is a privilege and this privilege must be taxed.
The era of remote work is here and it’s not going away any time soon. Luckily, the current tax policies are favorable to them so there’s no hurry involved.
As we near the end of the financial year don’t forget to file your taxes promptly. This will allow you to claim certain allowances, like exemptions on certain nontaxable commodities.
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