Preparing For Tax Season: Understanding What Has Changed Due To The Pandemic
PITTSBURGH (KDKA) - What's in your mailbox?
In increasing numbers, W-2s are arriving and we are turning our attention to getting our taxes filed.
Kevin McQuillan of the McQuillan Group says you don't need to rush.
"The IRS is not going to be accepting any tax returns until they say February 12," he explained. "That's when they think they'll go live, but it will not be processed or the process will not begin from their end until that point."
Which gives you time to get all your forms in a row and McQuillan says this year that is a bit more complicated due to the pandemic.
WATCH: How Will Stimulus Payments And Unemployment Affect Tax Returns?
While you are not required to claim or pay taxes on your stimulus check McQuillan says if you didn't get the top amount you might want to consider it.
"If you're in the phase-out range, you may be leaving money on the table because the IRS may have paid you on a different year like 18, and you may be entitled to some more," he said.
While the stimulus check is not taxable income, if you didn't get the second check, or the right amount the first time it can be filed for with your taxes on a space for a "Recovery Rebate Credit."
You will either get the money or have the amount credited against what you owe.
If this is your first time on unemployment..."Yes, unemployment is going to be taxed. We're trying to encourage people to have withholdings especially if they weren't used to it. It is going to be taxable income," McQuillan explained.
Working from home and thinking of taking a home office credit?
"That effectively went away a couple of years ago," McQuillan says.
So many people took money out of their 401k to help stay afloat this year and McQuillan says while that money is taxable.
"You actually have three years that you can either put the money back prorate and not pay any tax or pay tax on it over three years, or some combination," he said.
McQuillan and his colleagues in the tax preparing industry are facing a host of IRS changes that didn't come until late December.
"As a preparer, I am concerned about the challenges of preparing an accurate tax return, based on all these last-minute changes," he said.
And here's his point of concern: "The matching up with the stimulus payments potentially, or CARES Act people who took money from retirement, you know, things like that. There's going to be, I think, a significant increase potentially in automatic notices from the IRS which only sends people in a tizzy because if they're frightening, they're intimidating."
If you normally don't file a tax return McQuillan says this might be a good time to do that.
The motivation? Stimulus checks.
"If you file a return and the IRS has your bank account, it could speed up any future stimulus payments or anything else that we've had going on so I would encourage people to file, even if they don't have to," he said. "So the IRS has access for how to get you this money."
As for getting a timely refund once the IRS starts processing returns on February 12th.
"If your information lines up, if you have a current bank account, if you're filing an accurate return, you'll get your money and traditionally is less than two weeks."