Pandemic making taxes more difficult for many
[anvplayer video=”5009892″ station=”998122″]
Filing taxes could be trickier this year because of the pandemic. Unemployment, working from home and stimulus payments may need to be accounted for on the 2020 tax return.
Many experienced new financial situations during the pandemic that will affect the way 2020 taxes are filed.
"It’s obviously changed a lot of things. We’ve been working remotely for almost a year now," said Jacque Lee, office tax leader at Baker Tilly.
Lee is reminding people that unemployment checks are taxed federally, and at the state level. As for stimulus checks, they are not taxed.
And, there are still ways to claim the stimulus checks for those who are still owed that money.
FILE - This Wednesday, Feb. 13, 2019 file photo shows part of a 1040 federal tax form printed from the Internal Revenue Service website, in Zelienople, Pa. Tax filing season will start a bit later and look a bit different this year. That’s because the pandemic that defined 2020 has seeped into tax time as well. If you worked from home, received a relief payment, took on some gig work or filed unemployment benefits _ or someone filed a fake claim in your name _ there are things you need to be aware of. Likewise if you normally receive certain tax credits. The IRS will begin accepting tax returns on Feb. 12, 2021.[AP Photo/Keith Srakocic, File]
Lee says there’s a way in the 1040 filings to reconcile those payments.
Taxing time: How the pandemic will affect filing your taxes
"You will have the ability to claim that on your tax return and receive a refund for that. To the extent that you’ve received your check and it might have been incorrect and you received too much, people should know that you do not have to pay that back," said Lee.
There are still tax deductions that taxpayers can put in from working at home, if using a designated space.
"You look at your square footage, and you get to take a flat rate, times the square footage you have. And the other option, just requires more bookkeeping if you will, tracking particular expenses," said Lee.
Meanwhile, over at Prepare and Prosper in St. Paul, the nonprofit is overloaded with requests for help.
"To prepare tax returns is taking a longer time frame, and that’s why our voicemail is so full. We have a backlog because we can’t service so many appointments because of the time that a volunteer can spend with a taxpayer," said Alejandro Valenzuela, tax and financial services director at Prepare and Prosper.
Valenzuela says a good tip to speed things up is to have 2019 taxes handy. That money might help get more money back from the "earned income credit look back," especially for those who made less in 2020 than they did in 2019.
"They could go back to the 2019 taxes, and use their gross income for that year to be able to claim as much tax credits that are out there like their income tax credit and child tax credit," said Valenzuela.
Valenzuela says if someone is having trouble finding tax preparation help, local department of revenue websites offer more resources as well.