Tax season is upon us. And although no one wants to revisit 2020, you’re going to need to.
Hopefully, your 2020 taxes are the only thing creeping into the new year from 2020. Each year, the tax laws change, but the Covid pandemic created additional changes you’ll need to know. Don’t stress too much. Tax day is April 15th, 2021, so you have time to organize and figure everything out. When in doubt, that’s what we’re for!
As part of the 2020 CARES Act, the government sent out two stimulus, or EIP (Economic impact payments). These payments are not taxable and should not be reported as income, and will not be considered as part of your income for your taxes. If you did not receive the EIP payments, then you may be eligible for the RTC (refundable tax credit) when you file your taxes. If you possibly owe on your 2020 taxes, then you may owe less because of this credit.
Covid brought many challenges, and one of those were the high unemployment rates and government assistance. If you were an individual who used unemployment insurance (UI) benefits, then that added income was taxable. The government increased the benefit amount for many Americans, specifically between the end of March 2020 and July 2020. UI allowed up to a 10% withholding rate if the individual chose to do so. If that individual didn’t, then they may owe.
Regardless of the challenges 2020 brought, our team here at Red Rock Tax & Consulting can help answer any questions you may have.
