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Taxes Q&A: How do I get my stimulus lost in the mail? Do I owe taxes on PUA payments?
USA TODAY
2020 taxes: Do you owe taxes on stimulus checks or unemployment?Because of the coronavirus pandemic, 2020 may be a tax year like no other. Here are answers to some of your top questions.USA TODAYWe 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.We will be updating the Q&A, so check back often. But, also look to these places:How do I get my stimulus check that was lost in the mail?If you got a notice through the website Get My Payment or received a Notice 1444 (or 1444-B) showing your payment was issued, you should request a payment trace if it has been:4 weeks since the payment was mailed6 weeks since the payment was mailed, and you have a forwarding address9 weeks since the payment was mailed, and you have a foreign addressIf the check wasn’t cashed, the IRS will reverse the payment and notify you, and then you can claim the Recovery Rebate Credit on your 2020 taxes.However, if the check was cashed, the Treasury Department’s Bureau of the Fiscal Service will send you a claim package and then you have to follow the process it comes with. Treasury will review the claim, but you shouldn’t file for the credit in your 2020 taxes until the trace is complete.If you need to request a trace, here’s the information from the IRS to call or mail/fax the appropriate form.— Josh RiveraFollow Josh on Twitter @Josh1RiveraWhat is the penalty for postponing tax filing?You still have time to file for an extension if you need time past the due date of April 15. You can file for a six-month filing extension here. The due date for those with an extension is Oct. 15.But the IRS notes: “To get the extension, you must estimate your tax liability on this form and should also pay any amount due.”— Josh RiveraFollow Josh on Twitter @Josh1RiveraWill I have to pay taxes if I only received PUA in 2020?If you received any unemployment income last year, it is subject to taxes. You’ll need to find Form 1099-G to file your taxes, this is the form that shows how much you were paid in unemployment and how much taxes were withheld – if any.Federal income taxes apply to these benefits – whether it’s state unemployment insurance or the pandemic unemployment compensation (PUA) under the CARES Act.— Josh RiveraFollow Josh on Twitter @Josh1RiveraIf my W-2 is blank because you are exempt from tax do I have to send it to the IRS?Yes, you must report all income regardless of exemptions or credits.— Josh RiveraFollow Josh on Twitter @Josh1RiveraIf I did not have enough taxes withheld from my unemployment aid, will I also owe a penalty?When claiming unemployment it is recommended that you withhold taxes from it as it is considered taxable income. Federal law allows recipients to choose a flat 10% withholding from these benefits to cover part or all their tax liability, the IRS says.In order to have taxes withheld from unemployment aid, you need to complete Form W-4V, Voluntary Withholding Request, and give it to the agency paying their benefits (usually the state’s Labor Department).When it comes to penalties, however, the IRS says that they comes into play if you didn’t pay enough tax throughout the year, either through withholding or by making estimated tax payments. “Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller,” the agency states.— Josh RiveraFollow Josh on Twitter @Josh1RiveraI want to know if I had zero income in 2020 do I need to file to get my stimulus check?For the first and second stimulus checks the IRS was using Americans’ most recent tax returns available to calculate whether they would get an economic impact payment and how much – during 2020 those would be 2018 or 2019.Submitting a 2020 return, even if you had no income, would make it possible to claim a stimulus payment because the money was an advance on a tax credit. By filing a return and showing you were eligible for the credit but didn’t receive it, you can claim the stimulus…. How to file for 2020 when I had absolutely no income, other than a stimulus checks?It is still recommended that you file taxes to keep a record of you financial situation for the year and possible upcoming stimulus payments.Stimulus payments could also indirectly affect what you pay in state income taxes in some states where federal tax is deductible against state taxable income, according to The New York Times.— Josh RiveraFollow Josh on Twitter @Josh1RiveraHow can I electronically file my taxes for free?You can use IRS Free File to prepare and file your federal income tax online for free if your income is below $72,000. For those with income above that amount, you can access IRS’ Free Fillable Forms. The IRS’ IRS2Go (iOS, Android) is a bare-bones app that lets you check your refund status and schedule payments if you owe money. It can even connect you with an IRS Volunteer Income Tax Assistant. For simple federal filers, H&R Block, FreeTaxUSA and Credit Karma (now owned by TurboTax’s Intuit) are also available. (Note that these services work for simple filers. Those with additional items to report, like an HSA, investments, have moved or are self-employed might need additional services.)— Josh Rivera and Jennifer JollyFollow Josh on Twitter @Josh1Rivera and Jennifer @JenniferJolly.Am I allowed to skip a required minimum distribution for 2021?Under the CARES Act, required minimum distributions for 2020 were waived. However, RMD is back on for 2021.If you don’t take a RMD you might get a penalty of 50% of the shortfall, on top of whatever taxes are due on the original amount.RMDs are based on the balance in your traditional IRAs, 401(k)s and other retirement-savings plans as of Dec. 31, 2020, and an IRS life-expectancy factor based on your age.The SECURE Act, passed in late 2019, raised the age to start taking the required withdrawals to 72. For 2022, the IRS released new tables for all three life expectancy tables affecting RMD.— Josh RiveraFollow Josh on Twitter @Josh1RiveraHow do I file my taxes if I didn’t receive a Notice 1444?… I received one of the stimulus checks in 2020 and one in 2021, do I report both in 2020 taxes or on the years received?Brittany Benson, senior tax research analyst, The Tax Institute at H&R Block, said even if you don’t receive, or didn’t keep a Notice 1444 for a stimulus payment, you should still enter the amount you received in advance payments to accurately calculate your recovery rebate credit. You can use an IRS online account and go to the “tax records” tab to see the amount of EIPs received. The IRS suggests that you can check your IRS account online for the stimulus amount received, if you misplaced Form 1444 or Form 1444-B.The IRS only began mailing out Form 1444-B for the second stimulus payments the first week of February. So there’s a shot that form will show up in the mail soon. Don’t throw it out.— Susan TomporFollow Susan on Twitter @tompor.Can I claim stimulus payments if I just graduated college?For both of the last two rounds of stimulus checks, payments were available for adults and for child dependents under the age of 17. Unfortunately, anyone who was claimed as a dependent on someone else’s return wasn’t eligible for a check of their own. As a result, many college students were ineligible.The IRS thought they were still dependents based on their parents’ old returns, but they were adult dependents so no money was sent for them.Submitting a 2020 return will make it possible to claim a stimulus payment because the money was an advance on a tax credit. By filing a return and showing you were eligible for the credit but didn’t receive it, you can claim the stimulus funds you’re due.— Christy BieberThe Motley FoolI 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 RiveraFollow Josh on Twitter @Josh1RiveraWill 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 RiveraFollow Josh on Twitter @Josh1RiveraHow 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 RiveraFollow Josh on Twitter @Josh1RiveraCan 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 RiveraFollow Josh on Twitter @Josh1RiveraHow 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 RiveraFollow Josh on Twitter @Josh1RiveraWhen 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 longer…. Special case for states affected by winter storm.The deadline for individuals and businesses in Texas is June 15.Taxpayers in other states affected by the winter storms that had disaster declarations issued by the Federal Emergency Management Agency will automatically receive the same filing and payment relief, the IRS said.— Josh Rivera and Kelly TykoFollow Josh on Twitter @Josh1Rivera and Kelly @KellyTykoWill 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 PicchiFollow Jessica on Twitter @JessicaMenton and Aimee @aimeepicchiWhat 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 TomporFollow 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 TomporFollow 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 TomporFollow 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 PicchiFollow 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 TomporFollow Susan on Twitter @tompor.Ask more questions!
