![]() People who haven't yet filed and choose to file electronically, simply need to respond to the related questions when preparing their tax returns. Tax preparation software has been updated to reflect these changes. Information for people who haven't filed their 2020 tax return These taxpayers may want to review their state tax returns as well. If they now qualify, they should consider filing an amended return to claim this money. Taxpayers can use the EITC Assistant to see if they qualify for this credit based upon their new taxable income amount. However, taxpayers would have to file an amended return if they did not originally claim the EITC or other credits but are now eligible to claim them following the change in the tax law. Taxpayers only need to file an amended return if the recalculations make them newly eligible for additional federal tax credits or deductions not already included on their original tax return.įor example, the IRS can adjust returns for taxpayers who claimed the earned income tax credit and, because the exclusion changed their income level, may now be eligible for an increase in the EITC amount. Second, those married filing jointly who are eligible to exclude up to $20,400, and others with more complex returns.First, taxpayers who are eligible to exclude up to $10,200.The agency will do these recalculations in two phases. ![]() Any resulting overpayment of tax will be either refunded or applied to other taxes owed. For taxpayers who already have filed and figured their 2020 tax based on the full amount of unemployment compensation, the IRS will determine the correct taxable amount of unemployment compensation. This law change occurred after some people filed their 2020 taxes. Information for people who already filed their 2020 tax return All other eligible taxpayers can exclude up to $10,200 from their income. People who are married filing jointly can exclude up to $20,400 – up to $10,200 for each spouse who received unemployment compensation. This means they don't have to pay tax on some of it. Under the new law, taxpayers who earned less than $150,000 in modified adjusted gross income can exclude some unemployment compensation from their income. These refunds are expected to begin in May and continue into the summer. The IRS will automatically refund money to eligible people who filed their tax return reporting unemployment compensation before the recent changes made by the American Rescue Plan. However, a recent law change allows some recipients to not pay tax on some 2020 unemployment compensation. "because of COVID you may have to drop it off."Īnd if you make under $72,000 a year you can qualify for the use of free tax software and online filing by going to any unemployment compensation someone receives is taxable. Head to irs.gov you can enter your address and it will show you which programs and which sites may be available to you in your area,' Washington said. "Your income generally has to be under $57,000 a year to qualify. If you can't afford a tax preparer you may qualify for one, at no cost. Family member or friend, whoever you loaned money to."Įxperts say you can write off up to $3,000, but if you're looking to do this, you should get a professional tax preparer to help. "The way that this works is if someone owed you money, you know they're not going to pay you back, you can actually take it as deduction on your tax return. ![]() ![]() "If you are someone who gave a bonafide loan, not a gift, but a loan to someone and, you know, because of COVID or whatever the case may be, this person has maybe faced a financial hardship and will not pay you back you qualify for what's called the bad debt deduction," Washington explained. That change was based off of the latest stimulus package, so if you've already filed your taxes, the IRS will make that adjustment for you and increase your refund. Tax experts say that $10,200 write-off could mean a savings of $1,020. "And it simply means you do not have to include up to $10,200 of unemployment benefits in 2020 on your taxes." "If you earn less than $150,000 you'll qualify for a tax break up to $10,200," she said. People who relied on unemployment benefits in 2020 are in for a break, according to Forbes advisor, tax expert and former IRS agent Kemberley Washington. Now that you have an extra month the I-Team is sharing tips on how to get extra cash back into your pocket. The federal tax deadline was extended from April 15 to May 17 because of the COVID pandemic. You have extra time to file your taxes this year, which also means extra times to find extra money for your refund.ĬHICAGO (WLS) - The extra time to file your 2020 tax return this year also means more time to find savings. ![]()
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