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Taxes Q&A: When is the filing deadline for 2020 taxes? Will I owe taxes on stimulus checks?

Taxes Q&A: When is the filing deadline for 2020 taxes? Will I owe taxes on stimulus checks?

DIGITAL MARKETING NEWS

Taxes Q&A: When is the filing deadline for 2020 taxes? Will I owe taxes on stimulus checks?

USA TODAY
2020 taxes: Do you owe taxes on stimulus checks or unemployment?Because of the coronavirus pandemic, 2020 may be a tax year like no other. Here are answers to some of your top questions.USA TODAYWe have officially entered tax season. And, in this time of uncertainty, USA TODAY is working to find answers to your tax questions – anything from how your stimulus checks or unemployment benefits affect your 2020 plans. You can submit your questions here and read earlier answers below.We will be updating the Q&A, so check back often. But, also look to these places:When is the deadline for 2020 tax filing?Don’t count on a deadline extension just yet. The IRS said April 15 will be the deadline for filing 2020 tax returns, while October 15 will be the deadline to file for an extension.Generally, tax refunds for electronically filed returns are issued within three weeks, while paper filing can take longe— Josh RiveraFollow Josh on Twitter @Josh1RiveraWill I owe taxes on stimulus checks?No, stimulus checks aren’t considered income by the IRS. They are prepaid tax credits for your 2020 tax return, authorized by two relief bills passed last year that aimed at stabilizing the struggling U.S. economy in the wake of the pandemic. Because the stimulus payments aren’t considered income by the tax agency, it won’t impact your refund by increasing your adjusted gross income or putting you in a higher tax bracket, for instance.When it comes to getting paperwork ready, you’ll want to dig up the IRS Notice 1444 for the stimulus payment amount you were issued in 2020. And the second round of payments would be outlined in Notice 1444-B.  — Jessica Menton and Aimee PicchiFollow Jessica on Twitter @JessicaMenton and Aimee @aimeepicchiWhat if I never received a stimulus payment?“If you didn’t receive the full payment you were entitled to, then it’s possible that when you are filing your 2020 tax return you may end up getting more money,” says Eric Bronnenkant, head of tax at financial services firm Betterment.“If your economic situation changed – let’s say you qualified based on 2018 or 2019 income because it was lower, but your economic situation improved for 2020 – the IRS actually can’t ask for any of that money back,” Bronnenkant adds. “Your situation can’t get worse in that scenario.”Taxpayers will need to file a 2020 federal income tax return to claim the Recovery Rebate Credit if they didn’t get their Economic Impact Payments or they received less money than they’re eligible to get, such as if a child’s credit wasn’t included in the payout. The Recovery Rebate Credit is listed on Line 30 of the 1040 Form for the 2020 tax year. — Aimee Picchi and Susan TomporFollow Aimee on Twitter @aimeepicchi and Susan @tompor.What if I collected unemployment compensation in 2020? The tax season shocker for many jobless people will be that their tax refund could be far smaller than expected, or they might even owe taxes. Taxes aren’t withheld automatically from unemployment benefits. If you are unemployed in 2021, and receiving unemployment compensation, you may want to take action to have federal taxes withheld in the future.Look out for Form 1099-G, Certain Government Payments, to show how much unemployment compensation was paid to you in 2020. See Box 1 for the taxable income you must report on Line 7 on Schedule 1 of the 1040.See Box 4 for any taxes that you might have withheld from your unemployment benefits during the year. You’d report those withholdings on Line 25b of the 1040.— Jessica Menton and Susan TomporFollow Jessica on Twitter @JessicaMenton and Susan @tompor.What if I lost my job during the pandemic?Tax filers will be able to choose whether they want to use either their 2019 or 2020 earned income to calculate the Earned Income Tax Credit on their 2020 income tax returns, thanks to a one-time lookback provision. The lookback will help financially challenged people qualify for the refundable portion of the Child Tax Credit, which is allowed even if you do not owe any tax. Unemployment compensation is taxable income. Since many did not have taxes withheld, they could face a tax bill. A generous payout for the earned income credit could offset some taxes that will be owed and even contribute to a tax refund.The earned income credit will vary. The maximum credit is $6,660 for those filing a 2020 tax return but applies only to tax filers who have three or more qualifying children. By contrast, the maximum credit is $538 for someone who has a limited earned income but no children.The maximum adjusted gross income allowed to obtain the earned income credit is up to $15,820 for those who are single with no children.The highest cutoff is $56,844 for married couples filing a joint return with three or more qualifying children. The cutoff is an adjusted gross income of $41,756 for those who are single, widowed or head of household with one child.— Susan TomporFollow Susan on Twitter @tompor.My income changed since I last filed my taxes. What should I do?In that case, you should use the recovery rebate worksheet to calculate how much you are owed and claim that amount on Line 30 on their 2020 tax return. You’ll receive the stimulus payments in your refund check.— Aimee PicchiFollow Aimee on Twitter @aimeepicchi.What if I donated to a food bank or another charity during the pandemic?Food banks and others found themselves in need of contributions as the country dealt with skyrocketing unemployment. Many of us heard the call and wrote out checks that can now be used as a tax deduction. See Line 10-b on the 1040 return for 2020 to take an above-the-line deduction for charitable contributions. Cash donations of up to $300 made to qualifying organizations before Dec. 31, 2020, are now deductible when you file your tax return, thanks to a special provision enacted earlier last year. — Susan TomporFollow Susan on Twitter @tompor.Ask more questions!


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