January 2021 Question and Answer

Question:

I worked as a ride share driver for the first time in 2020. What will I have to pay tax on?

Answer:

Ride share drivers have to pay tax on the total income they receive from the ride share service, less all applicable deductions. You’ll be able to deduct your ride share mileage at the IRS (2020) rate of $0.575 per mile. And if you incurred parking fees or tolls while driving, you can deduct those too.

If you made more than $600 in 2020, you will receive a 1099-NEC form from the company. This form will tell you how much income you made that you need to report.

Question:

We sold our home last year. Will we have to pay taxes on the sale?

Answer:

If the home you sold is your primary residence and you lived in it for two of the last five years, up to $500,000 of the gain is excluded from your federal income tax, if your tax filing status is married filing jointly.

But if you sold a primary residence within the last two years, you can’t claim another exclusion for two years. There are some exceptions for events such as divorce or death of a spouse. Consult your tax professional if your situation is not straightforward.