AUGUSTA, Ga. – Tax Day is just around the corner. COVID has changed a lot about the ways we do things, and maybe even how you’ll do your taxes this year.
Stimulus Checks
One of the more confusing factors is how to claim stimulus checks.
“Depending on if you are married, single, with kids, everybody got different amounts of stimulus money,” said Ellis McCutcheon, certified public accountant and partner at Bedingfield, McCutcheon & Perry.
McCutcheon says many people did not receive the full amount, or the amount they are entitled to.
“If we find that you are entitled to more of a stimulus from any one of the three, we can ask for it for a credit with your 2020 tax return,” McCutcheon said.
For those who did not receive any stimulus checks, there is a box to check on the tax form.
“The most frequent one I’ve run into lately has been college aged children who were not eligible the first time around,” McCutcheon said. “If they’re now out on their own, this is their first year filing a tax return, they will be eligible.”
The IRS has slowed operation due to COVID. For a local baker who has not received her 2019 tax return or any stimulus checks, the delay has hit hard.
“Being a restaurant worker, we have taken a huge hit during the pandemic,” baker at The Boll Weevil Café, Becca Gulino said. “I’ve run up my credit cards, I’ve been behind on my rent. So those stimulus payments were going to be a huge help for me.”
McCutcheon says for many like Gulino, receiving the stimulus amount they are entitled to may take time, but be sure to check the IRS website about stimulus eligibility.
“The IRS website will say if you should or should not have received a stimulus payment,” McCutcheon said. “It does not tell you the amount, which is a problem. The only way we can find out the amount is through your bank records.”
401k withdrawals
During the pandemic, some had to withdraw from their 401k accounts early.
“If you had to, it happens. It’s very common,” McCutcheon said.
But this year, the penalty is not as substantial.
“Typically, if you were to withdrawal from a 401k or IRA early, you would pay your normal income tax rate, plus a 10 percent penalty,” McCutcheon said. “They have waived the penalty this year. You would still owe the income tax, but you’re going to owe that when you withdraw that now or if you withdraw that in retirement.”
He advises people to replace the money sooner rather than later.
“If you’re still eligible to put that money back in your 401k, that is always the best option, not just for taxes, but future growth of your retirement account,” McCutcheon said.
Unemployment payments
Under the COVID relief package, roughly the first $10,000 an individual received in unemployment in 2020 is tax free.
“Normally, unemployment is taxable income like a W2 like any other job or contract labor. But part of this relief bill is they made the first $10,000 of any individuals unemployment tax free.”
