The Internal Revenue Service (IRS) will start collecting tax returns later this week but due to the pandemic, there are a number of changes you should keep in mind when filing.
A year of stimulus checks, unemployment payments, and working from home are just a few of the many things people need to think about when filing this year to avoid owing money or missing out on refunds.
Although the IRS isn't processing 2020 tax year returns until later this week, many people are already getting ready to start filing early.
"Yes, I am getting my taxes done early in case you have to pay. That way, you are prepared,” said Alfredo Ruiz.
At A-Plus Tax in Santa Maria, tax preparer Nelsy Bork says many people have already shown up asking about stimulus payments and how those will affect their taxes.
"What we can do, if you have not received your stimulus money, we can claim it on your tax return,” Bork said.
According to Certified Public Accountant Joseph Hajjaj, who is based in Santa Maria, even those who don't have tax filing requirements should also file this year.
"So these individuals who did not have a filing requirement, they are encouraged to file and claim their stimulus on their taxes. Yes, that will be a good scenario for a senior citizen or a student who is not independent or any citizen who is independent and basically said, 'oh, I just made $8,000' so he did not file,” Hajjaj said.
Another thing to keep in mind is unemployment benefits. if you received unemployment in 2020, it is taxable.
“It is still early in the season but I have seen a lot of unemployment income that reaches 24, 26, 28-thousand dollars so that's a lot of money, so [a] taxpayer needs to be aware to make sure they actually withheld enough federal income tax for that,” Hajjaj said.
For those who switched to working from home, expenses cannot be claimed unless you are self-employed or a gig worker.
"If you are just an employee and you use your home or something like that, you can use it on your state income tax but not the federal,” Hajjaj said.
According to the IRS, more than 150 million tax returns are expected to be filed this year.
The tax season starts Friday and the filing deadline is April 15.
