An already taxing time will be even more complex this year, as the financial fallout of the coronavirus pandemic lands on nearly every bottom line one way or the other.
“It was definitely an interesting, chaotic year,” said Kevin Rose, a CPA and partner with the Chattanooga accounting firm of Market Street Partners, PLLC.
For many individuals, two rounds of stimulus payments of varying amounts depending on income hit their bank accounts in 2020, with more expected in 2021. Tax time is an opportunity to double back and make sure that stimulus amount reflects any changes taxpayers experienced in 2020 – from the birth of a child to a change in income, Rose said.
“If the stimulus payment was lighter than it should have been, the way to true it up is that 2020 tax return,” Rose said.
The stimulus payments aren’t taxable income, though unemployment payments are, which may come as a surprise to some taxpayers, said Julie Sforza-Smith, program manager at The Tax Institute at H&R Block.