Taxes Q&A: I never got my mailed stimulus, can I claim it in my taxes? How do I file if I only received unemployment?
We have officially entered tax season. And, in this time of uncertainty, USA TODAY is working to find answers to your tax questions – anything from how your stimulus checks or unemployment benefits affect your 2020 plans. You can submit your questions here and read earlier answers below.
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I never got my second stimulus check, even though it says it was mail. Can I claim it on my taxes?
If you are eligible for a stimulus check and it was lost, stolen or destroyed, you should request a payment trace so the IRS can determine if your payment was cashed. (You can do that here.)
If a trace is initiated and the IRS determines that the check wasn't cashed, the IRS says it will credit your account for it but the IRS cannot reissue the payment. Instead, you will need to claim the Recovery Rebate Credit on your 2020 tax return if eligible.
"If you are filing your 2020 tax return before your trace is complete, do not include the payment amount on line 16 or 19 of the Recovery Rebate Credit Worksheet," the IRS says. "You may receive a notice saying your Recovery Rebate Credit was changed, but an adjustment will be made after the trace is complete.If you do not request a trace on your payment, you may receive an error when claiming the Recovery Rebate Credit on your 2020 tax return."
— Josh Rivera
Follow Josh on Twitter @Josh1Rivera
Will the IRS base the next stimulus package on our 2020 or 2019 taxes?
... My new husband and I filed "married filing joint" for the first time this year. We qualify for earned income credit and have child tax credits as well.
The first two rounds of Economic Impact Payments (stimulus checks) were structured as upfront payments of a tax credit for 2020. Those payments were determined by income on filers' 2018 or 2019 returns – depending on which ones were available at the time of issuing.
So if your situation changed over the year you maybe be able to claim full or additional payments based on their 2020 tax return – through the Recovery Rebate Credit, line 30 of the 1040 form.
The third round of stimulus payments will likely be based on either 2019 or 2020 tax returns – again, depending on which ones are available at the time of issuing. That could impact the timing of your filing if you want the 2020 to be the basis of what the decision is made.
— Josh Rivera
Follow Josh on Twitter @Josh1Rivera
How do I sign up for direct deposit for the stimulus payments if I don't have to file a tax return?
Unfortunately, the IRS's Non-Filers tool is no longer available. It might behoove you to still file your 2020 taxes so you can claim the stimulus on your 2020 tax return as the Recovery Rebate Credit.
— Josh Rivera
Follow Josh on Twitter @Josh1Rivera
Can the IRS take my stimulus money to offset previous year’s tax penalties?
The IRS says it will not garnish stimulus checks for back taxes.
— Josh Rivera
Follow Josh on Twitter @Josh1Rivera
How do I file taxes if I only received unemployment in 2020?
Unemployment benefits are taxable income. If you received unemployment benefits at any point you should have receive a Form 1099-G reporting the 2020 total to the IRS. If you didn't receive the form, most state unemployment sites will have the form available to download once you log in. If you had any taxes withheld from the benefits those should appear on the form.
— Josh Rivera
Follow Josh on Twitter @Josh1Rivera
When is the deadline for 2020 tax filing?
Don't count on a deadline extension just yet. The IRS said April 15 will be the deadline for filing 2020 tax returns, while October 15 will be the deadline to file for an extension.
Generally, tax refunds for electronically filed returns are issued within three weeks, while paper filing can take longe
— Josh Rivera
Follow Josh on Twitter @Josh1Rivera
Will I owe taxes on stimulus checks?
No, stimulus checks aren't considered income by the IRS. They are prepaid tax credits for your 2020 tax return, authorized by two relief bills passed last year that aimed at stabilizing the struggling U.S. economy in the wake of the pandemic. Because the stimulus payments aren’t considered income by the tax agency, it won’t impact your refund by increasing your adjusted gross income or putting you in a higher tax bracket, for instance.
When it comes to getting paperwork ready, you'll want to dig up the IRS Notice 1444 for the stimulus payment amount you were issued in 2020. And the second round of payments would be outlined in Notice 1444-B.
— Jessica Menton and Aimee Picchi
Follow Jessica on Twitter @JessicaMenton and Aimee @aimeepicchi
What if I never received a stimulus payment?
“If you didn't receive the full payment you were entitled to, then it's possible that when you are filing your 2020 tax return you may end up getting more money,” says Eric Bronnenkant, head of tax at financial services firm Betterment.
“If your economic situation changed – let's say you qualified based on 2018 or 2019 income because it was lower, but your economic situation improved for 2020 – the IRS actually can't ask for any of that money back,” Bronnenkant adds. “Your situation can't get worse in that scenario.”
Taxpayers will need to file a 2020 federal income tax return to claim the Recovery Rebate Credit if they didn't get their Economic Impact Payments or they received less money than they're eligible to get, such as if a child's credit wasn't included in the payout.
The Recovery Rebate Credit is listed on Line 30 of the 1040 Form for the 2020 tax year.
— Aimee Picchi and Susan Tompor
Follow Aimee on Twitter @aimeepicchi and Susan @tompor.
What if I collected unemployment compensation in 2020?
The tax season shocker for many jobless people will be that their tax refund could be far smaller than expected, or they might even owe taxes.
Taxes aren't withheld automatically from unemployment benefits. If you are unemployed in 2021, and receiving unemployment compensation, you may want to take action to have federal taxes withheld in the future.
Look out for Form 1099-G, Certain Government Payments, to show how much unemployment compensation was paid to you in 2020. See Box 1 for the taxable income you must report on Line 7 on Schedule 1 of the 1040.
See Box 4 for any taxes that you might have withheld from your unemployment benefits during the year. You'd report those withholdings on Line 25b of the 1040.
— Jessica Menton and Susan Tompor
Follow Jessica on Twitter @JessicaMenton and Susan @tompor.
What if I lost my job during the pandemic?
Tax filers will be able to choose whether they want to use either their 2019 or 2020 earned income to calculate the Earned Income Tax Credit on their 2020 income tax returns, thanks to a one-time lookback provision. The lookback will help financially challenged people qualify for the refundable portion of the Child Tax Credit, which is allowed even if you do not owe any tax.
Unemployment compensation is taxable income. Since many did not have taxes withheld, they could face a tax bill. A generous payout for the earned income credit could offset some taxes that will be owed and even contribute to a tax refund.
The earned income credit will vary. The maximum credit is $6,660 for those filing a 2020 tax return but applies only to tax filers who have three or more qualifying children. By contrast, the maximum credit is $538 for someone who has a limited earned income but no children.
The maximum adjusted gross income allowed to obtain the earned income credit is up to $15,820 for those who are single with no children.
The highest cutoff is $56,844 for married couples filing a joint return with three or more qualifying children. The cutoff is an adjusted gross income of $41,756 for those who are single, widowed or head of household with one child.
— Susan Tompor
Follow Susan on Twitter @tompor.
My income changed since I last filed my taxes. What should I do?
In that case, you should use the recovery rebate worksheet to calculate how much you are owed and claim that amount on Line 30 on their 2020 tax return. You'll receive the stimulus payments in your refund check.
— Aimee Picchi
Follow Aimee on Twitter @aimeepicchi.
What if I donated to a food bank or another charity during the pandemic?
Food banks and others found themselves in need of contributions as the country dealt with skyrocketing unemployment. Many of us heard the call and wrote out checks that can now be used as a tax deduction.
See Line 10-b on the 1040 return for 2020 to take an above-the-line deduction for charitable contributions. Cash donations of up to $300 made to qualifying organizations before Dec. 31, 2020, are now deductible when you file your tax return, thanks to a special provision enacted earlier last year.
— Susan Tompor
Follow Susan on Twitter @tompor.
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This article originally appeared on USA TODAY: Taxes Q&A: How do I file if I only received unemployment?
