NORTHWEST ARKANSAS, (KNWA/KFTA) —The IRS will begin accepting and processing 2020 individual tax returns on Friday, February 12, which is a bit later than in previous years.
The IRS said the later date is to make sure everything is in place so the system runs smoothly and there are no delays in issuing refunds.
Grass Root Taxes, Owner and Enrolled Agent, Diane Hagerty said stimulus payments are tax-free but you do have to report it on your taxes.
If you are owed any payments or you never received a stimulus check in the first place then you will get it with your refund.
“For example, if you had a baby you should have gotten a payment for your baby. If you didn’t you can file for that on your taxes. You need to report what you got in your stimulus payments, what you should have gotten and they will make up the difference if your owed any,” said Hagerty.
Hagerty said you should have kept the letter you received when you got your check. If not you can always check your bank statements to verify the amount you received so you report it correctly.
Many people who lost their jobs during the pandemic filed for unemployment, those people should have received a 1099-G form in the mail. You will need this to file your taxes.
Hagerty said stimulus payments are not considered taxable income but unemployment benefits are.
So, if you collected unemployment that means you will have to pay federal and state taxes on it.
Hagerty said the state of Arkansas did have an allowance to have the federal taxes withheld but not for state taxes.
Hagerty tells us some families will be able to get a tax break by claiming the Earned Income Tax Credit which helps low to middle-income workers and those with children.
“Lots of people are going to look, figure out their taxes and say wow I’ve only earned a few thousand dollars. I’m going to lose all of my earned income credit but that’s not true. There’s an allowance to use your 2019 earned income to calculate your earned income credit,” said Hagerty.
Make sure to check all of the credits’ eligibility requirements so you don’t lose out on money you may be qualify for.
File by the April 15 deadline to avoid any penalties. If you end up in a situation where you owe money to the IRS and can’t pay it off by the deadline Hagerty said pay what you can and call the IRS to set up a payment plan.
The IRS recommends folks to file electronically and to use the direct deposit option to make sure you get your refund as quickly as possible.