- [Narrator] Tax season is here
as the world marks one year of a global pandemic.
For many, it was a year of unprecedented disruption
in our personal and economic lives.
- Taxes are, in many ways,
a reflection of the real world and the real economy.
So the real world and the real economy
were a total mess in 2020
and so the tax season
that we're having right now reflects that.
- [Narrator] The US government response
to the pandemic and changes in your own life
could combine to make this
a potentially tricky year for taxes.
Here's what you need to know.
Congress approved two rounds of stimulus payments in 2020.
Individuals earning less than $75,000
and couples earning less than $150,000
were eligible for the full amount.
Taken together, adults at these income levels
were eligible for $1,800 from the government
plus an additional $1,100 for every child under 17.
Many people quickly received the full amount
that they were entitled to.
But others didn't.
- The IRS has the information that it has
that you've sent them before, right?
So when they decide how much to send you
and they're looking at okay,
what's your income and what's your family size,
they're gonna pull from you the information they had.
So in March of 2020,
they were pulling from 2018 returns and 2019 returns.
If your income went down in 2020,
from being ineligible or partly ineligible
to fully eligible, then you can use your 2020 tax return
to claim the rest of that money.
Let's take an extreme case
of an individual who made 150,000 in 2019
and so they didn't get the $1,200 payment,
they didn't get the $600 payment
'cause all the IRS knew is oh, this is someone
who made 150,000.
If that person then, in 2020, made 50,000
and would have qualified for the full payments,
then you can go ahead and claim that full 1,800
on your 2020 tax return.
And there's also circumstances
where your household might have changed.
So the most common case would be you had a baby during 2020.
The IRS would have no way to know about that
until you send in your 2020 tax return.
And so you'll be able on that to claim $500
from the first round
and $600 for the second round.
- [Narrator] But what if you're one of the lucky ones
that had a good 2020?
Don't worry, you can get more stimulus money
if you're owed it
but the IRS won't take any stimulus back.
- [Richard] So let's take an example of someone
who made 50,000 in 2019.
They got a full $1,200 check in March,
a full $600 check in December,
so that's $1,800 based on the income that they had
to qualify within that range.
And then you had a good 2020.
You were one of the lucky ones
and then you made, as an individual, 120,000.
You wouldn't have qualified for any money.
That's okay.
These payments are not taxable.
- [Narrator] No matter what the circumstances are
that have changed,
if you're owed more stimulus money,
you can claim it on line 30 on your tax return.
There's also now a third round of stimulus payments
that Congress passed in March.
There aren't relevant to your 2020 taxes
but filing your 2020 taxes will update the information
the IRS has so it could help you get the full amount
you're entitled to sooner.
The pandemic closed offices this year
so many workers set up home offices
or relocated for more space.
- [Richard] The IRS, from the federal perspective,
if you're working in Maryland or Virginia or New York
or New Jersey, it doesn't matter to them
that federal income is the same.
But it can have significant state tax consequences.
Some states like New York are known
for being particularly aggressive
in enforcing their state tax laws
and trying to expand the boundaries
of the work that they're taxing.
Other states may not be.
In general, if you ended up spending the year working
in the state where you live
as opposed to the one that you used to commute to,
it's worth taking some time
to figure out how that state pairing works together.
- [Narrator] Millions of people lost their jobs
as a result of the pandemic in 2020
and Congress funneled assistance
to many out-of-work people
through state unemployment systems.
Many first-time recipients
were surprised to learn
that unemployment benefits are taxable income
and that they might be facing a large tax bill
if they didn't have enough tax money
withheld from their unemployment benefits.
But in the law passed in March 2021,
Congress moved to prevent these surprise tax bills.
- [Richard] What Congress did in March,
retroactively said the first $10,200
of unemployment benefits per worker
are exempt from taxes
for households making up to $150,000,
which took away that surprise tax burden
for a lot of people.
They're gonna save about $25 billion to those households.
- [Narrator] Since this law only passed recently,
some recipients have already paid taxes
on the first $10,200 of their unemployment benefits for 2020
either through withholding or filing early.
If you're one of those people, don't worry.
- [Richard] If you filed your tax return
and then basically paid taxes on your unemployment benefits,
the IRS says don't do anything,
don't send in an amended return.
They're gonna do the math themselves
and send out refunds to people
who are in that situation.
- [Narrator] Thankfully, the IRS has given taxpayers
a little more time to figure out their taxes
from this strange and difficult year.
- [Richard] The filing deadlines this year,
we're all used to April 15th being April 15th
but this year, it's not.
For most people, the deadline to pay your 2020 taxes
is May 17th now, not April 15th.
If you're in Texas, Oklahoma or Louisiana,
because of the storms,
all of the deadlines are pushed to June 15th.