Tax Update for Unemployment Recipients

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IRS PROVIDES INFORMATION ON 2020 UNEMPLOYMENT BENEFITS

The IRS has provided the following information regarding 2020 unemployment benefits and the 2021 tax filing season:

Unemployment benefits

A record number of Americans applied for unemployment compensation in 2020 due to the pandemic. Anyone who received unemployment benefits will need to report it on their tax returns.

However, the American Rescue Plan, enacted on March 11, 2021, excludes from income up to $10,200 ($20,400 if married filing jointly) of unemployment compensation received in 2020 for taxpayers with modified adjusted gross income under qualifying thresholds. Any amount over $10,200 is still taxable for each person. To determine if payments received for being unemployed are taxable, see the Interactive Tax Assistant on IRS.gov.

For those who have already filed their 2020 tax return and paid taxes on the full amount of unemployment compensation before the law was passed, they should not file an amended return. The IRS will automatically refund money to people who already filed their tax return reporting unemployment compensation.

The IRS will recompute any credits and deductions claimed on the original return. However, if the reduction of income now qualifies a taxpayer for a new credit not claimed on the original return, like the Earned Income Tax Credit (EITC), those taxpayers will need to file an amended tax return, Form 1040x, to claim the new credit. Taxpayers can see if they qualify for the EITC at IRS.gov.

Unemployment benefit recipients should have received a Form 1099-G, Certain Government Payments, from the agency paying the benefits. The form will show the amount of unemployment compensation they received in 2020 in Box 1, and any federal income tax withheld in Box 4.

Some states do not mail Form 1099-Gs. Taxpayers may need to get the electronic version from their state’s website.

Taxpayers who received an incorrect Form 1099-G for unemployment benefits they did not receive should contact the issuing state agency to request a revised Form 1099-G showing they did not receive these benefits.

Taxpayers who are unable to obtain a timely, corrected form from their state should still file an accurate tax return, reporting only the income they received. A corrected Form 1099-G showing zero unemployment benefits in cases of identity theft will help taxpayers avoid an unexpected federal tax bill for unreported income.

Additionally, if taxpayers are concerned that their personal information has been stolen and they want to protect their identity when filing their federal tax return, they can request an Identity Protection Pin (IP PIN) from the IRS.

Generally, by law, unemployment compensation must be included as income. Taxable benefits include any of the special unemployment compensation authorized under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted in 2020.

If a taxpayer didn’t report income from gig work or unemployment compensation on a return, a corrected return can be filed using Form 1040-X, Amended U.S. Individual Income Tax Return. Form 1040-X can be filed electronically.

Taxpayers who owe but can’t pay in full always have options to seek help through payment plans and other tools from IRS.gov/payments.

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IRS PROVIDES INFORMATION ON 2020 UNEMPLOYMENT BENEFITS

Mary:

The IRS has provided the following information regarding 2020 unemployment benefits and the 2021 tax filing season:

Unemployment benefits

A record number of Americans applied for unemployment compensation in 2020 due to the pandemic. Anyone who received unemployment benefits will need to report it on their tax returns.

However, the American Rescue Plan, enacted on March 11, 2021, excludes from income up to $10,200 ($20,400 if married filing jointly) of unemployment compensation received in 2020 for taxpayers with modified adjusted gross income under qualifying thresholds. Any amount over $10,200 is still taxable for each person. To determine if payments received for being unemployed are taxable, see the Interactive Tax Assistant on IRS.gov.

For those who have already filed their 2020 tax return and paid taxes on the full amount of unemployment compensation before the law was passed, they should not file an amended return. The IRS will automatically refund money to people who already filed their tax return reporting unemployment compensation.

The IRS will recompute any credits and deductions claimed on the original return. However, if the reduction of income now qualifies a taxpayer for a new credit not claimed on the original return, like the Earned Income Tax Credit (EITC), those taxpayers will need to file an amended tax return, Form 1040x, to claim the new credit. Taxpayers can see if they qualify for the EITC at IRS.gov.

Unemployment benefit recipients should have received a Form 1099-G, Certain Government Payments, from the agency paying the benefits. The form will show the amount of unemployment compensation they received in 2020 in Box 1, and any federal income tax withheld in Box 4.

Some states do not mail Form 1099-Gs. Taxpayers may need to get the electronic version from their state’s website.

Taxpayers who received an incorrect Form 1099-G for unemployment benefits they did not receive should contact the issuing state agency to request a revised Form 1099-G showing they did not receive these benefits.

Taxpayers who are unable to obtain a timely, corrected form from their state should still file an accurate tax return, reporting only the income they received. A corrected Form 1099-G showing zero unemployment benefits in cases of identity theft will help taxpayers avoid an unexpected federal tax bill for unreported income.

Additionally, if taxpayers are concerned that their personal information has been stolen and they want to protect their identity when filing their federal tax return, they can request an Identity Protection Pin (IP PIN) from the IRS.

Generally, by law, unemployment compensation must be included as income. Taxable benefits include any of the special unemployment compensation authorized under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted in 2020.

If a taxpayer didn’t report income from gig work or unemployment compensation on a return, a corrected return can be filed using Form 1040-X, Amended U.S. Individual Income Tax Return. Form 1040-X can be filed electronically.

Taxpayers who owe but can’t pay in full always have options to seek help through payment plans and other tools from IRS.gov/payments.

Of course if you have questions or need to file your taxes, contact our office by emailing support@mtaustinandassoc.com

Many Happy Returns!

Introducing: The Badass Business Owners Bootcamp – May 19, 2019

Join me and fellow business owners in releasing the financial frustration of owning your own business. We will gather in an intimate setting, release judgement and fear and be empowered and educated! Come as you are and I will share my 18 years of CEO wisdom to help you with:
Confidence
Better choices
Smart decision making
Making a profit in your business

We respect the need to budget so we are announcing in plenty of time to save or request a payment plan.
Sunday May 19th will be a special day of wealth, wisdom, and empowerment. here’s the link for more information and to sign up.

I hope to see you there!

bit.ly/bbobootcamp

Find the event on Facebook:

https://www.facebook.com/events/792969611059648/?ti=as

Happy Financial Freedom Day!

Let today be your first step towards financial freedom! Announcing our FIRST Webinar for individuals offered by our financialliteracy division, The Restoration Station on July 22nd.

We understand you’re as busy as we are so we’re delivering the online lesson in three 25 minute sessions. Easily digestible, stepbystep instructions on how to set up your own household budget.
You will receive a separate electronic worksheet for you and any children in your household to apply the tools you will learn in the class. You will also be invited to the follow up Q&A on #Facebook and #instagram #live!

Sign up today to secure your spot!⤵️

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This is the only time this class will be offered at the introductory price. Sign up and let us help you get on the train to financial freedom. I’ll see you at the station!💙 #thekeytowealth #firststeps to #financialhealth

Income and Flexibility as a Mompreneur

Listen to the podcast of my interview with C Thomas Gambrell II of Birth A New Business where I share my secret to sustaining a home based business as a single parent! Click below to hear it. I’d love your comments and feedback. Did you hear something that was useful to you as an entrepreneur? ⤵️

Birth a New Business Podcast.

#TaxTip: Six Important Facts to know before deducting a charitable donation

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Groups – Adults and Business People

Welcome to Financial Freedom Press! It’s tax season and we will be sharing valuable information directly from the IRS website that will help you in filing your federal tax return. As always, MT Austin and Associates would be honored to provide your individual or small business, non-profit tax preparation services. We offer competitive pricing and personal attention. You can schedule a 15 minute consultation at your convenience by accessing our calendar HERE —> CALENDAR

or email us at austin@mtaustinandassoc.com. Wishing you Many Happy Returns!

Know these Facts Before Deducting a Charitable Donation

If taxpayers gave money or goods to a charity in 2016, they may be able to claim a deduction on their federal tax return. Taxpayers can use the Interactive Tax Assistant tool, Can I Deduct my Charitable Contributions?, to help determine if their charitable contributions are deductible.

Here are some important facts about charitable donations:

  1. Qualified Charities. Taxpayers must donate to a qualified charity. Gifts to individuals, political organizations or candidates are not deductible. To check the status of a charity, use the IRS Select Check tool.

  2. Itemize Deductions. To deduct charitable contributions, taxpayers must file Form 1040 and itemize deductions. File Schedule A, Itemized Deductions, with a federal tax return.

  3. Benefit in Return. If taxpayers get something in return for their donation, they may have to reduce their deduction. Taxpayers can only deduct the amount that exceeds the fair market value of the benefit received. Examples of benefits include merchandise, meals, tickets to events or other goods and services.

  4. Type of Donation. If taxpayers give property instead of cash, their deduction amount is normally limited to the item’s fair market value. Fair market value is generally the price they would get if the property sold on the open market. If they donate used clothing and household items, those items generally must be in good condition or better. Special rules apply to cars, boats and other types of property donations.

  5. Non-cash Charitable Contributions. File Form 8283, Non-cash Charitable Contributions, for all non-cash gifts totaling more than $500 for the year. Complete section-A for non-cash property contributions worth $5,000 or less. Complete section-B for non-cash property contributions more than $5,000 and include a qualified appraisal to the return. Taxpayers may be able to prepare and e-file their tax return for free using IRS Free File. The type of records they must keep depends on the amount and type of their donation. To learn more about what records to keep, see Publication 526, Charitable Contributions.

  6. Donations of $250 or More. If taxpayers donated cash or goods of $250 or more, they must have a written statement from the charity. It must show the amount of the donation and a description of any property given. It must also say whether they received any goods or services in exchange for the gift.

Taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.

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How to protect your finances before the New Year; ticket #4

Welcome to the Financial Freedom Press!  This newsletter is a publication of The Restoration Station the financial literacy division of  MT Austin and Associates,your accounting solution! The mission of  The Restoration Station is to help place you on the right track to financial freedom.  We offer FREE tools (tickets) and resources to support you on your journey to financial freedom and wealth!


TICKET #4: Shred documents with personal information

cr-shredderDo yourself a favor – if you don’t have a personal shredder, purchase one. There are a number low cost shredders made for home use that range from $15-$75 ; the lower priced shredders are made to sit on top of a small wastebasket. Mail theft is still common, especially during the end of the year when tax documents and year end banking and investment statements are often mailed to clients. Shredding your documents with personal and financial information instead of throwing them in the trash will lower your chance of being a victim of identity theft and fraud.

Don’t forget to also shred your old credit cards and insurance cards instead of throwing them in the trash. Most shredders come with ability to shred credit cards. Once your shredder is filled, instead of dumping it in the trash, bag it up and donate it to your local pet shelter! The shelters often use shredded paper when they run out of kitten litter; you will feel good that you’re donating to a worthy cause and recycling at the same time!

 

I hope you have found this “tool” useful. Please comment below if you have questions or feedback. If you haven’t already, please subscribe to our blog, Financial Freedom Press to read the previous three tickets . We also invite you to visit The Restoration Station on Facebook for FREE resources and weekly live broadcasts with valuable tickets and information for the individual household and entrepreneur.

MT Austin and Associates , sponsor of  The Restoration Station provides accounting, financial reporting and income tax services to corporations, non profits and individuals. If we can be of service, please do not hesitate to send a message to us from the contact page of our website. We appreciate the opportunity to be of service!

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How to protect your finances before the New Year; ticket #3

Welcome to the Financial Freedom Press!  This newsletter is a publication of The Restoration Station the financial literacy division of  MT Austin and Associates,your accounting solution! The mission of  The Restoration Station is to help place you on the right track to financial freedom.  We offer FREE tools (tickets) and resources to support you on your journey to financial freedom and wealth!


TICKET #3: Review your health insurance bills

surprised-women-reading-n-0012Insurance companies and doctor’s offices are not immune to making human mistakes yet most people don’t bother to look at the statements from their insurer before they pay the balance due or quickly file away the invoice when no payment is due.

Why is it important to check your health insurance bills? Your insurance bill could be an early detector of identity theft. Hospitals and doctor’s offices must request a copy of your identification and insurance card before they provide services. If you see a charge on your health insurance bill for an item, doctor, facility or date that you do not recognize it could be possible that someone used your identification. If you notice something wrong, contact the doctor or health facility’s billing department for a detailed description of the item. If you are certain that it was not your claim, contact your health insurance company  immediately to request an investigation into the charge and correct the error.

If the health office confirms the person provided accurate identification and you suspect that you are a victim of identity theft, visit ftc.gov/idtheft to file a claim.

 

I hope you have found this “tool” useful. Please comment below if you have questions or feedback. If you haven’t already, please subscribe to our blog, Financial Freedom Press to receive the fourth ticket and visit The Restoration Station on Facebook for FREE resources and weekly live broadcasts with valuable tickets and information for the individual household and entrepreneur.

MT Austin and Associates , sponsor of  The Restoration Station provides accounting, financial reporting and income tax services to corporations, non profits and individuals. If we can be of service, please do not hesitate to send a message to us from the contact page of our website. We appreciate the opportunity to be of service!

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How to protect your finances before the new year ; TICKET #2

Welcome to the Financial Freedom Press!  This newsletter is a publication of The Restoration Station the financial literacy division of  MT Austin and Associates,your accounting solution! The mission of  The Restoration Station is to help place you on the right track to financial freedom.  We offer FREE tools (tickets) and resources to support you on your journey to financial freedom and wealth!


TICKET #2Check your banking activity! 

bank-statementMost banks make it easy for you to view your daily activity and pending transactions through an app on your phone. If you do not have access to an app, you should have the ability to log into your online banking account to view the current activity. You should also be able to download a copy of your last bank statement. If you still receive your bank statements in the mail, we strongly suggest you contact your bank’s customer service department and request “paper free” or digital downloads of your monthly bank statements. Most banks will now charge to mail paper statements and this would be an opportunity to both save on the banking fee and lessen the chance of your sensitive information being taken from the mail.

We suggest you get in the habit of checking your bank statements every month. Financial institutions often make errors and are only liable for them for 90 days after the date of the bank statement. In other words if the bank made an error on your statement, and you wait more than three months to look at your statement and dispute the item, you lose the opportunity to have the error corrected by the bank. You want to make sure everything is accurate, and that you can identify each cash transaction and debit purchase. If you notice something wrong, contact the vendor and/or the bank immediately.

We have provided a link to this FREE sample letter for reporting an incorrect charge to a credit card company or retail store.

If you suspect identity theft, visit ftc.gov/idtheft to report the incident.

I hope you have found this “tool” useful. Please comment below if you have questions or feedback. If you haven’t already, please subscribe to our blog, Financial Freedom Press to receive the next two tips and visit The Restoration Station on Facebook for FREE resources and weekly live broadcasts with valuable tickets and information for the individual household and entrepreneur.

MT Austin and Associates , sponsor of  The Restoration Station provides accounting, financial reporting and income tax services to corporations, non profits and individuals. If we can be of service, please do not hesitate to send a message to us from the contact page of our website. We appreciate the opportunity to be of service! Many Happy Returns!

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