Don't Mess With Taxes

Sometimes it's worth the extra time and effort to file an amended tax return. In its regular email to tax professionals last week, the Internal Revenue Service remined them that their clients who filed 2020 returns before the American Rescue Plan Act (ARPA) excluded a portion of unemployment from tax don't need to file amended returns. The IRS says it will recalculate the tax liability of these filers, taking into account the tax they paid on $10,200 per person in unemployment benefits before ARPA's March 11 enactment date. If the early-filing taxpayers are due a refund, the IRS will automatically... Read more →

Photo: RODNAE Productions via Pexels April 7 is National No Housework Day. I didn't realize that until #TaxTwitter pal Joe Kristan noted it at the end of his Eide Bailly LLP tax roundup blog post today. In my defense, I overlooked No Housework Day because that's basically every day for me. Oh, I do some household chores, but grudgingly. And I'm lucky. The hubby is a more diligent cleaner than I. That means we don't (so far) have a paid housekeeper. But some folks do. And depending on the arrangement, those who hire household help have some tax tasks to... Read more →

While the Internal Revenue Service is working on recalculating taxes paid on unemployment benefits by early filers, other taxpayers are dealing with potential tax bills on money they didn't get. They are victims of unemployment insurance fraud. And their numbers increased last year as millions of people filed for the jobless assistance in the wake of the COVID-19 pandemic. To help people dealing with unemployment identity theft, the Department of Labor (DoL) has launched a new website. Alerted by mail: Many don't learn that unemployment benefits have been fraudulently collected in their names until they receive something in the mail.... Read more →

You lost your job last year and collected unemployment. You knew that the benefits are taxable income, so when you filed your 2020 tax return earlier this year, your calculations made sure that Uncle Sam got his piece of your unemployment money. Then along came the American Rescue Plan Act (ARPA), signed into law on March 11, and its provision excluding a portion of jobless benefits from tax. How do you get your overpaid unemployment taxes back? This week, the Internal Revenue Service followed up on its earlier announcement that filers shouldn't amend their 2020 returns because of the new... Read more →

It's April. You know what that means. Major League Baseball is back! Yep, the return of The Boys of Summer takes top billing this month since the Internal Revenue Service pushed the usual April 15 Tax Day to May 17. I'll be spending this Opening Day doing what I do every year when the professional baseball season starts: watching games. All 30 MLB teams are in action today, so that's a lot of innings to occupy my time. Update: Today's meeting of my East Coast team, the Baltimore Orioles, at the Red Sox's Fenway Park is postponed until Friday due... Read more →

IRS Commissioner Chuck Rettig's testifying on March 18, 2021, before the House Ways and Means Subcommittee on Oversight. Watch the full hearing at the Ways and Means' hearings YouTube channel. When large swaths of the world shut down last year in response to COVID-19, it helped make the literal life-or-death medical situation less devastating (relatively speaking). But the coronavirus closures also created damaging economic fallout. Businesses shuttered their doors, some permanently. Associated companies took hits. Employees lost their jobs. In the United States, federal coronavirus relief legislation provided some help. However, it also produced unwelcome side effects. Surprise unemployment taxes:... Read more →

With the expansion of available COVID-19 vaccines, many workers are looking forward to shutting down their home offices and soon heading back to their offices. Others, however, have left the workforce for good. Unfortunately, the work status change for some recent retirees didn't happen quite as they had planned. More than two-thirds, or 68 percent, of individuals who responded to Allianz Life's 2021 Retirement Risk Readiness survey said they retired earlier than expected. That's a significant increase from the 50 percent who took early retirement last year. The coronavirus pandemic has underscored that much of life is beyond our control.... Read more →

Even during a pandemic, more routine illnesses occur. Don't put off seeing a doctor. Your medical spending account money can help cover office visit copays and much more. And if you're facing a March 15 deadline to spending the money, don't miss it! Medical concerns are top of mind for most of us right now because COVID-19. But as doctors are quick to point out, you shouldn't let pandemic fears keep you from seeking medical help, either for less-severe ailments or regular treatments of a chronic illness. In addition to paying attention to your and your family's health, you also... Read more →

Being the boss can be fulfilling, exciting and, if profitable, mean more tax responsibilities, like paying self-employment taxes. (Photo by Zen Chung via Pexels.com) There are a lot more self-employed taxpayers this filing season, thanks to (you guessed it) the COVID-19 pandemic. People whose hours were reduced at their full-time jobs made up (or tried to) the lost income with side gigs. Others whose salaried positions were eliminated embraced their entrepreneurial spirit and became their own bosses. Now they are filing their tax returns for the first time with self-employment income. That, of course, means encountering another form, Schedule SE.... Read more →

In addition to looking for another job, folks who got unemployment benefits also have to deal with paying taxes on the payments and, in some cases, other complications. Unemployment benefits can be a lifesaver. That's been especially true during the year+ that we've been dealing with COVID-19 complications. Employers had to reduce services or close completely. In addition to the business costs, the establishments' workers were suddenly facing steep pay cuts or no pay at all. Congress has boosted state unemployment insurance (UI) benefits through much of the coronavirus pandemic. The latest federal UI add-on is set to expire in... Read more →

Last year, as companies and employees were struggling with operational changes necessary to safely deal with the COVID-19 pandemic, the Internal Revenue Service IRS provided relief that allowed employers to tweak benefits plans so that employees had increased flexibility to make mid-year changes to dependent care spending accounts. This change helped parents who had set aside tax-deferred money in child care accounts, but because their kids were at home while mom and/or dad also worked at home, did not need as much care account funds as they anticipated pre-pandemic. Today, the IRS has issued additional guidance on the latest coronavirus... Read more →

Just can't bring yourself to do your taxes? Don't worry. There's no rush (yet). And there are some good reasons to wait a bit before finishing your Form 1040. The 2021 tax filing season is finally underway. The Internal Revenue Service started processing returns on Friday, Feb. 12. A lot of the 1040 forms actually had been submitted electronically weeks earlier, and were just waiting for Uncle Sam to accept them. This is not unusual. Millions of taxpayers file as early as possible, with good reason, every year. But there's something to said for those of us who wait. Here... Read more →

Much of Texas got record snowfall on Feb. 14-15, with around 6 inches covering our backyard. Thank goodness for some much welcome sunshine today, but it's still below freezing, meaning our heater is working overtime! (Photo by Kay Bell) We have sunshine here in Central Texas! Still, the high temperature today in the greater Austin area is not expected to break the freezing mark. That means my home's heater is still in overdrive. And that means my next bill is going to be ginormous. The only consolation, is that I can count part of that heating bill as a home... Read more →

Today's unemployment numbers offered a hopeful sign for the U.S. economy struggling with the COVID-19 pandemic. The news, however, is not so good for many who in 2020 got these out-of-work benefits. Many recipients of the emergency financial assistance are surprised to learn that unemployment benefits are taxable. Others are even more surprised at the amounts on their Form 1099-G. This is the document sent to taxpayers and copied to the Internal Revenue Service. While social media messages and comments on the ol' blog are purely anecdotal, it seems that quite a few folks think their 2020 unemployment benefits have... Read more →

I've always done my taxes. When the hubby and I married, I continued this annual task, now filing our joint return. The only change is that every tax season the hubby periodically peers over my shoulder as I work on our return and chants, "Deduct! Deduct! Deduct!" Although taxes aren't his thing, he's right. Deductions can help lower taxes. And for most of our marriage, we've found it better to itemize deductions on Schedule A. But even then, we've been able to use now and then what are known as above-the-line deductions. Back when these write-offs got that name, they... Read more →

Happy Monday to Patriots' — I mean Buccaneers' — fans. Your man Tom Brady did it again. Instead of the usual sports league drug tests, can we get a DNA sample to prove that the man is human? It's an even happier Monday for all y'all who collected on Super Bowl LV bets, both the ones on the on-field match-up and all the goofy prop bets for things only peripherally related to the National Football League championship game. The Internal Revenue Service is happy for you, too, as long as you report those winning wagers on your tax return. All... Read more →

Yes, I know very few filers use paper tax forms now. But even if you rely on tax software or a tax preparer, it's still worth a look at what's on Form 1040. There are some changes to the form and its three schedules for 2020 filings. (Photo by MoneyBlogNewz via Flickr CC) The 2020 Form 1040 makes it official. The never-really-a-postcard individual tax return is dead. This filing season, set to officially begin on Feb. 12, taxpayers and preparers will see a Form 1040 that looks very much like the two-page version that we tax veterans used to call... Read more →

The Earned Income Tax Credit (EITC) is the federal government's largest refundable federal income tax credit for low- to moderate-income workers. In 2020, more than 25 million taxpayers received over $62 billion in EITC. The average EITC amount received last year was $2,461 per return. The EITC also is regularly overlooked. The Internal Revenue Service estimates that one of five eligible taxpayers do not claim the credit. That oversight could change this filing season. The COVID-19 pandemic pushed millions of American workers into lower income brackets last year as their work was reduced. That could make them eligible for this... Read more →

Photo by Kay Bell The 2021 filing season won't start until Feb. 12 this year. That's frustrating for the millions of taxpayers who traditionally are early return filers. It's more frustrating for those taxpayers who, because of COVID-19 complications (which also created this year's filing delay), are really counting on their tax refunds to cover expenses. This year's later than usual filing start means it is even more important to get those 1040 forms into the Internal Revenue Service as soon as the agency will take them. If you're still debating about when to file your taxes, here are seven... Read more →

Small businesses are adapting their operations to make it through the COVID-19 pandemic. Some tax breaks in the relief bill enacted at the end of 2020 could help. (Photo by Norma Mortenson via Pexels) Most COVID-19 relief focus has been on the added financial help to individuals. That's understandable. Millions of folks have been struggling to make ends meet as the pandemic has ravaged the economy. But they are facing fiscal woes in large part because their employers are in trouble, too. When companies get their footing back, they can start to rehire laid off staff and things should pick... Read more →