Jackson Hewitt Answers Tax Planning Questions about Employment Changes

Mark Steber discusses the impact COVID-19 has had on employment and taxes in new YouTube video

Jackson Hewitt Tax Service® released a new video today that examines the impact the pandemic and stay-at-home orders have had on millions of taxpayers’ employment tax. Mark Steber, Chief Tax Information Officer at Jackson Hewitt Tax Service, answers common questions about employment changes and explains how these changes might affect 2020 tax returns and documentation needed for tax preparation.

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“Many taxpayers have felt the impact of the pandemic and stay-at-home orders on their jobs and their income,” details Steber. “Whether furloughed, unemployed, or working a side gig for extra income, all unemployment changes will have an impact on your taxes.”

Steber answers common questions about how employment changes impact taxes.

What if my income wasn’t impacted during the pandemic?
If you were fortunate enough to continue working and paid during the pandemic, your taxes won’t look very different than before. Just make sure you retain all your documents, such as forms W’s and 1099s for interest dividends and even retirement distributions. Also be sure to maintain your charitable contribution totals, mortgage interest, property taxes you’ve paid, and any additional state and local income taxes paid for the year. If you’re not filing single, be on the lookout for family members that might have been impacted to make your tax return more complicated.

What if I was furloughed and able to pick up a temporary job?
If you were furloughed but able to obtain a temporary job, make sure you gather your W-2s from all of those jobs. If you worked a side gig, like working for a delivery service company or walking dogs, making masks, trading in virtual currency, or any venture allowing you to earn money, make sure you keep a record of your income, the miles you drove, and any additional expenses you may have had during this time.  If you ran any business, you might even qualify for a home office tax deduction. If you are just an employee working at home, you are not eligible for this benefit. But you might if you have a side gig and your office is in your home.

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What forms will I receive if I was retired or preparing to retire?
If you were retired or went ahead and took the plunge after COVID, you should receive a form 1099-R for your retirement distributions. If you’re 62 or older and choose to start drawing from Social Security, you should receive a form SSA-1099. If you are retiring from the railroad, you should receive a form RRB-1099 instead of the SSA-1099.  If this is your first tax year for retirement, be extra careful on your taxes because there will be likely be tons of changes and new tax considerations for the first few years of retirement.

What do I do with my IRS Letter (Letter 1444) from getting a stimulus check?
Keep the IRS Letter (Letter 1444) you received with the amount of Economic Impact Payment, or Stimulus, and date of payment so you can include this on your 2020 tax return. If you are eligible for more credit, you can receive it as part of your refund, if entitled to one. This will be particularly tricky come tax time if you received stimulus money but cannot remember how much and don’t have the record letter. Your taxes could be delayed even though you don’t have to repay any of the credit if you got too much.

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