COVID-19’s impact on your taxes
HIXSON, Tennessee- The $600 weekly checks given to Americans on Unemployment due to the COVID-19 pandemic could end up hurting your tax returns.
It is an area of contention with the IRS where they are monitoring it really closely right now so people are getting their tax refund as quickly.
Owner of legacy CPA Brian Manthe said this year you might want to file your taxes early with the help of a tax professional.
“We are able to securely file your tax returns, there’s so much I don’t need that going around but if you get into us early in the tax season we can get your tax returns uploaded to the IRS,” said Manthe.
The Earned Income Tax Credit is designed to help lower to middle income families.
“Earn income credit is there to help reduce that gap between lower income way turners and trying to take care of the family,” said Manthe.
If you filed for unemployment during 2020, your unemployment plus the additional weekly bonus checks, are taxable.
“Unemployment, it’s just like getting a paycheck and this year with the $600 additional. It showed up in peoples bank account and the problem is a lot of people didn’t plan for that and they didn’t withhold enough taxes,” said Manthe.
Stimulus checks are not part of your taxable income but, if you didn’t receive either check you can file that on your taxes.
The U.S. government is allowing a one-time look back. This allows people to use either 2019 or 2020 taxes to get the highest return possible.
“If you’re unemployed for most of the year, and in 2019 you had better income, you can look back to 2019 and grab that income and use that to put it towards the calculation of income credit,” said Manthe.