“Many taxpayers have felt the impact of the pandemic and stay-at-home orders on their jobs and their income,” details Steber. “Whether furloughed, unemployed, or working a side gig for extra income, all unemployment changes will have an impact on your taxes.”
Steber answers common questions about how employment changes impact taxes.
What if my income wasn’t impacted during the pandemic?
If you were fortunate enough to continue working and paid during the pandemic, your taxes won’t look very different than before. Just make sure you retain all your documents, such as forms W’s and 1099s for interest dividends and even retirement distributions. Also be sure to maintain your charitable contribution totals, mortgage interest, property taxes you’ve paid, and any additional state and local income taxes paid for the year. If you’re not filing single, be on the lookout for family members that might have been impacted to make your tax return more complicated.
What if I was furloughed and able to pick up a temporary job?
If you were furloughed but able to obtain a temporary job, make sure you gather your W-2s from all of those jobs. If you worked a side gig, like working for a delivery service company or walking dogs, making masks, trading in virtual currency, or any venture allowing you to earn money, make sure you keep a record of your income, the miles you drove, and any additional expenses you may have had during this time. If you ran any business, you might even qualify for a home office tax deduction. If you are just an employee working at home, you are not eligible for this benefit. But you might if you have a side gig and your office is in your home.
What forms will I receive if I was retired or preparing to retire?
If you were retired or went ahead and took the plunge after COVID, you should receive a form 1099-R for your retirement distributions. If you’re 62 or older and choose to start drawing from Social Security, you should receive a form SSA-1099. If you are retiring from the railroad, you should receive a form RRB-1099 instead of the SSA-1099. If this is your first tax year for retirement, be extra careful on your taxes because there will be likely be tons of changes and new tax considerations for the first few years of retirement.
What do I do with my IRS Letter (Letter 1444) from getting a stimulus check?
Keep the IRS Letter (Letter 1444) you received with the amount of Economic Impact Payment, or Stimulus, and date of payment so you can include this on your 2020 tax return. If you are eligible for more credit, you can receive it as part of your refund, if entitled to one. This will be particularly tricky come tax time if you received stimulus money but cannot remember how much and don’t have the record letter. Your taxes could be delayed even though you don’t have to repay any of the credit if you got too much.
Jackson Hewitt Tax Service is here to help with any tax questions you may have amidst the uncertainty of the pandemic. To learn more about employment changes and taxes, visit https://youtu.be/9wFLcNkrmc0.
To schedule an appointment with a Jackson Hewitt Tax Pro or to find the nearest office location, visit jacksonhewitt.com/officelocator.
About Jackson Hewitt Tax Service Inc.
Jackson Hewitt Tax Service Inc. is an innovator in the tax industry, with a mission to provide its hard-working clients access to simple, low-cost solutions to manage their taxes and tax refunds. Jackson Hewitt is devoted to helping clients get ahead and stands behind its work with its Maximum Refund and Lifetime Accuracy guarantees. Clients can choose to file at one of Jackson Hewitt’s nearly 6,000 franchised and company-owned locations, including 3,000 in Walmart stores and online, making it easy and convenient for clients to file their taxes. For more information about products, services, and offers, or to locate a Jackson Hewitt office, visit www.jacksonhewitt.com or call 1 (800) 234-1040.
SOURCE Jackson Hewitt Tax Service Inc.