BAKERSFIELD, Calif. (KERO) — Tax season is officially upon us and this past week the IRS started accepting and processing 2020 tax year returns, however, millions of Americans are still looking for answers.
In a normal year, filing taxes can be a daunting process, but now with all the added variables due to the pandemic, this raises questions among tax-payers, so local CPAs break down everything you need to know.
“It's important to have a good relationship and communication with your tax preparer anytime there are changes like this, you want to make sure you're well informed because unemployment, for example, can completely change your tax situation, same with gain or loses from the sales of stocks and obviously stimulus checks,” said Joel Sandoval with Sandoval Tax CPAs.
Joel Sandoval with Sandoval Tax CPAs says it's important to stay in touch with your tax preparer all year long, to avoid those expensive surprises come tax season. And this seems to be the case for many, according to Al Afrouzian, another local preparer. "What I've been getting a lot of calls on and you know emails, regarding the stimulus checks whether or not they are taxable or unemployment,” said Afrouzian. And while the stimulus checks are not taxable, they still need to be filed. He adds, “In professional tax software that the accountants deal with, there's an area that when were preparing their 2020 tax return, we have to answer how much it was and when they received it.”
If you did not receive a stimulus check, but still qualified for it, Sandoval says you're in luck.
“If they did not receive their stimulus we can actually request a credit on their tax return so that way they're able to get that stimulus amount on their actual return.”
While these checks are non-taxed, this isn't the case for unemployment benefits. “Hopefully most taxpayers claimed the box that had federal taxes withheld because unemployment benefits are taxable.“
Sandoval says if you did not follow the process correctly when originally signing up for benefits with the EDD, then you could owe money.
“The refunds are usually smaller or they end up having to pay tax which completely changes their situation.”
While unemployment was at an all-time high in 2020, the stock market was also making headlines. Which Sandoval says is another factor to consider when preparing your taxes.
“That 1099 would report the losses and those losses help you technically pay less in taxes or get a better refund, depending on your situation, if you had a gain though, it would be the complete opposite, you'd have to pay taxes on the profit that you made.”
So prior to your tax appointment, preparers ask to have all paperwork on hand.
The deadline to file your taxes is April 15. Now, if you miss that deadline you may have the opportunity to file an extension which will give you an additional six months to file, but keep in mind, Sandoval says if you do owe taxes this will not give you additional time to pay.
If you need the forms to file your unemployment benefits, visit the EDD website.