BUFFALO, N.Y. (WKBW) — It’s everyone’s favorite time of the year! Time to get out your paperwork, crunch the numbers and file taxes. Okay, maybe it’s not a fan favorite, but this year, it’s incredibly important.
"There’s a lot of little nuances that are going to protect peoples refunds this year," said Tim Eliason, Public Relations Manager at EG Tax.
And there’s a lot to cover. Stimulus money, retirement accounts, unemployment, dependents, deductions and more.
We asked Eliason, from EG Tax in the Town of Tonawanda, your questions and got the answers for you.
Stimulus Checks. Can they be taxed?
The short answer? No.
"It’s been a rule of thumb right now that they don’t touch it. Every indication we’ve had is that the stimulus cannot be touched for anything except child support," said Eliason.
And more good news, you can get both stimulus checks on your returns.
How does the pandemic impact the timeline of filing this year?
Normally, the IRS would start processing returns this week, but it’s delayed this year until February 12.
"The only thing that’s going to delay is people that had the earned income credit and additional child tax credit," said Eliason.
So those returns might arrive later than usual.
But everyone can start filing right now.
What if I collected unemployment this year?
There is one document you absolutely need to get. The 1099-G form.
"Make sure you get that 1099-G for your unemployment, that document is not mailed to them, they have to retrieve it," said Eliason.
Either online or by phone, call 888-209-8124.
And because of unemployment, if you didn’t make as much money in 2020, there's still a way to get a good refund. So bring all of your 20````19 documents with you.
"On the tax return, we get to actually use 2019 numbers. If it’s better to use their earned income from their 2019 return on 2020, it might help their refund," said Eliason.
What if I took money out of my retirement account to get through the pandemic?
Eliason says don't worry, there are options out there to pay it back in your own time.
"If the taxpayer is impacted by COVID-19, they can take a distribution up to $100,000 and not be subjected to the 10% early withdrawal penalty. The distribution can be included in income ratably over a 3-year period unless the taxpayer elects otherwise. The taxpayer can also contribute the money back to their retirement plan within three years and treat the transaction as a direct rollover," said Eliason.
What if I had a baby in 2020?
Congratulations again! You can get an extra stimulus check.
Can I write off my home office?
If you use your home for your business, you can get that written off on state, but not federal taxes.
Should I get tax help online or in person?
"We’re accommodating everybody any way we can. We have a virtual thing where we can do returns with people online. We’re still doing in person, a lot of people like in person," said Eliason.
Could my college student cost me money?
If they collected unemployment, looks like they can, Mom and Dad.
"Your child must pay taxes on their unearned income if that amount is more than $1,100 in 2020. Taxable income attributable to the net unearned income will be taxed according to the brackets applicable to the parent(s)," said Eliason.
More questions? Let us know.