We get it, everyone is tired of hearing about COVID and unemployment; unfortunately, the reality for a large portion of the American population involves some amount of unemployment benefits. Naturally, you might be wondering what kind of implications this will have on your 2020 taxes at the beginning of the year.
As Atlanta and Stone Mountain residents start to collect documentation and organize financial information for 2020 taxes, it will be important to consider all of the unemployment checks you have received, as well. Here are a few tips and things to consider as you prepare to file for 2020.
Unemployment Form 1099-G
At the beginning of 2021, you should receive a form from the government that lists all of the unemployment pay you received for 2020. This important documentation will list what, if any, federal taxes were withheld from your checks each week. When combined with your partial employment from before layoffs and furloughs, you may end up owing some taxes at the end of the year. If you are concerned about this, don’t hesitate to reach out to tax specialists like us at NTRC Tax – we can help you optimize your filing so that you get the largest refund or pay as little in back taxes as possible.
As with any change in employment, it’s always best practice to consider your withholdings and filing status. If you just recently applied for unemployment, get ahead of the game and have the government withhold taxes from each check as it comes to you. In addition, once you regain employment, you’ll want to double-check with your employer that the withholdings (usually confirmed with a W-4 withholding certificate) were adjusted correctly to reflect your situation.
In addition, self-employed persons may have claimed unemployment in addition to their earned income, which would affect 2020’s taxable income. Make sure to take into account all of the CARES Act relief that may apply to your personal or business income.
Your Total Income Has Changed
No matter how you look at it, your tax bracket might have significantly changed this year; this means that you may be eligible for deductions and reductions (like the Earned Income Tax Credit) that you were not previously able to claim.
If you have any questions in regards to reductions, deductions, credits, or brackets, please don’t hesitate to reach out to our team of tax professionals. We know that this year has been tough on everyone, but it has been especially difficult for those who have lost wages and hours due to the coronavirus pandemic. We’re here to help – simply give us a call.