Tax deadline nears: How unemployment taxes work, tax credit tips
ORLANDO, Fla. - The clock is ticking to file your taxes – Monday is the deadline.
Some of you might still have questions about rule changes when it comes to paying taxes on unemployment, though.
To help, Tax Expert Doug Preble, the General Manager of Jackson Hewitt in Orlando, told FOX 35:
"So, typically you would have to claim any income you had whether it was earned or unearned. And unemployment is considered "unearned income" and is generally taxable on your taxes every single year - except - for 2020 because of the COVID pandemic. They said it's not going to be taxable.
"The challenge is: Congress made this decision in March [and there are ]people that filed in January or February and claimed it as taxable income and already filed their tax returns.
"So, what are those people supposed to do? Well, the IRS said they are going to fix all those tax returns that people filed in January and February so they do not want you to amend your tax return at this point – they will fix anything on the return relative to unemployment."
So, if you filed your taxes before March 11th, the IRS will amend your return to reflect the change for any taxes paid on unemployment up to $10,200.
About a third of Americans are still working to get their taxes done in time.
Expert Preble has some tax credit tips for those scrambling to get everything done in time:
"I would point out the fact that you can actually claim $300 of cash contributions to charities without itemizing. The standard deduction went up considerably so a lot of people forget they can claim those charitable contributions even if they're not itemizing. So, that's something we want to make sure people don't forget.
"If you're self-employed in any manner whatsoever, there's a form 7207. So, if COVID impacted your business and you were not able to do anything for a week or two, you can claim a credit on your schedule C, which is your self-employment on your form 1040.
"You can still do things today that will impact your 2020 tax return. You can still contribute to an IRA and take the tax deduction for that contribution into a retirement account and that can reduce your taxable income.
"And there's also a fairly new form that people are not familiar with called the 'Saver's Credit.' So, if you're married, filing jointly, and making less than $64,000, Uncle Sam will actually give you a tax credit if you're saving for your retirement. So, not only can you reduce your income – you can get another credit as well."
The minimum Saver's Credit is $1,000 or $2,000 if filing jointly but there are certain restrictions.
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