Last Minute Tax Facts You Might Not Know
The one constant in life is change, and your taxes are not immune. The ongoing pandemic produced an unprecedented response from congress in the form of the CARES Act. While not as extensive as the sweeping tax changes that were passed a few years ago, the CARES Act will nevertheless have an impact on your taxes.
If you were ever going to pull from your retirement, 2020 was the year to do it. If the withdrawal was Coronavirus related, you won’t have to pay the normal ten percent penalty for the early distribution. You can even pay the taxes on the distribution over three years instead of taking the hit this year.
You may be wondering about the first two stimulus payments you received. If you got the amount you were supposed to, it won’t have any effect on your taxes. If for some reason you didn’t receive one or both payments, you can claim that on your tax return.
When it comes to unemployment benefits, the news is definitely mixed. Many people received the enhanced unemployment benefits last year, and unfortunately these benefits are fully taxable. If you had ten percent withheld for taxes, you should be okay at the federal level, but since state agencies won’t withhold state taxes from your unemployment, don’t be surprised if you have to send a check to your state capital this year.
One more recent change is that the federal government and most state tax authorities have extending the filing and payment deadlines for 2021to May 17th. We hope these changes are changes for the better and you have a great 2021, taxes or not.