How COVID-19 Might Affect Your 2020 Taxes

With everything going on right now, none of us want to think about paying taxes in 2020. Shoot, many of us haven’t even filed our taxes for 2019! However, first time unemployment filers and those who have yet to receive stimulus payments might want to think ahead a bit, so they can both reap the full benefits and not get any unwelcome surprises next year.

***Unemployment benefits (including that extra $600 a month that recipients are currently getting under the CARES act) are taxable income at both the state and federal levels. Because of this, many tax experts and accountants suggest recipients consider having taxes deducted from their unemployment payments before they get them. While this will likely reduce the amount of money you have access to now, it could save you a lot of headaches when you file in 2021.

For more information on taxes and unemployment insurance, visit the IRS. 

***The CARES Act stimulus payment is an advance credit for your 2020 taxes, but what exactly does that mean? Simply put, you will not have to pay it back, nor will you have to pay taxes on it. Also, it doesn’t come out of, or affect, any 2020 refund you might be entitled to.

If you don’t receive a stimulus payment, and you feel you qualify, talk to your tax preparer. Your tax preparer can advise you if you are entitled to take the credit on your 2020 taxes, so you can recoup the money there.

For more information on the CARES Act stimulus payment, visit the IRS.