7 Important Tax Tips For Those Unemployed During Covid 19

Being unemployed and furloughed stinks in several ways. With the COVID-19 pandemic, the situation is more serious. Also, to top it all, you have to file your tax. Don’t you feel it’s the worst?

When your income drops down all of a sudden and drastically, the tax status may also change. However, with the tax tips by your side you can control this gloominess. This doesn’t mean you can skip tax filing, but these tips can help you with filing taxes when unemployed and how to go about it.

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Some Useful Tax Tips For Furloughed And Unemployed

1. File The Tax Return

It can be really easy to forget if you have been unemployed for some months. Still, you should file unless you meet the stringent guidelines.

If your annual income exceeds $12,200 for a single filer under 65 years, you need to file your income tax. If you don’t, the IRS charges penalties. Also, you may have to owe interest, too, if you don’t have enough withholding.

2. File As Early As Possible

You might have a refund coming. If you are unemployed or furloughed, little bit helps. Even when you have started out last year not expecting an income, losing the job may have moved you into a low tax bracket.

This means the withholding from your previous employer was really high. You may have a bigger refund coming than you really think. Now you know how to file taxes when unemployed.

3. Make Use Of Government Benefit Programs

You may not have been eligible before, but now you may be able to quality for many benefits, including unemployment insurance relief. Some others include

• Health insurance
• Food assistance
• Low cost auto insurance
• Low cost electricity, phone and gas
• Unclaimed funds

Now is not the time to be proud of. Take help wherever you think you need it.

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Go For Some Tax Breaks

Depending on the income you have earned, you might qualify for some tax breaks for unemployed, surely.

The earned income tax credit (EITC) from the federal government for people with low or moderate income. Unemployment benefits don’t count as earned income. So, if you have earned income, you cannot claim this.

The Child Tax Credit for qualifying children aged under 17. You can get $2000 per child and if the amount goes over your tax obligation of the year, you may be eligible for Additional Child Tax Credit at $1400 per child.

The Retirement Savings Credit allows credit along with some tax deductible IRA contribution. Eligible contributions to the IRA or employer-sponsored retirement plan may provide a credit of 10% to 50% of contributions based on your income level. The maximum is $2000 for single filers and $4000 for joint filers.

4. Job Termination Income Is Also Taxable

If you have received severance package, you should know the income is taxable. That’s not all, so is your income from unused vacation and sick leaves. It is one of the important tax tips for unemployed.

The amount would show on your W-2, so the IRS already knows about it.

5. Pay Taxes On Unemployed Income

Yes, unemployed income is taxable too. You need to report the full amount you have received and look for Form 1099-G showing you how much.

6. Self Employment Taxes

If you lost your job and turned to self-employment, the tax rules may differ. There isn’t a lot, however, it is important.

• Report business expenses
• Even if you do odd jobs, fill form SE and attach to the 1040
• Pay Social Security and Medicare taxes on income

7. Make Arrangements If You Can’t Pay On Time

If you find out that you owe the IRS, but you cannot make the entire payment by filling date, set up a proper payment plan.

The IRS has several options. Please note that you will pay interests and also penalties some time or the other.

Don’t file late since it incurs another set of penalties.

Now, these tips are not unusual and have always been true. However, it is not a usual time and more people are searching for drastic income changes than before.

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Top 10 Questions Regarding Extended Tax Deadline for Coronavirus

Coronavirus pandemic has panic-stricken the whole world. It has a deep impact on small businesses. Keeping these issues in mind, the federal government of the USA has extended the tax deadline for all. Several tax services Los Angeles mentioned that the decision comes as a sign of relief for several business owners and individuals. The government has not only extended the deadline but also amended a few tax laws.

15th July 2020 is the new deadline for the due date for taxes. However, do you know that an extension up to 15th October can be requested in some cases? Individuals can pay their tax up to this new extended deadline without any penalties.

People have different questions in their minds regarding this extended deadline. It includes the questions regarding eligibility, amount, refund, and more. The current post will answer ten such questions regarding the new extended tax deadline.

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1. Did I miss the usual tax deadline?

Fortunately, No. The IRS authorities extended the tax return deadline till 15th July 2020. The extended date is for not only filing the return but also for paying any previous tax owed. If you will pay the tax within this deadline, you don’t have to pay any penalties or any extra charges. So, still, you have a month left to pay the owed tax.

2. Am I eligible to get the deferral?

As per the regulation, all the taxpayers can take advantage of the deferral. However, remember that this extension is a temporary extension. Individuals filling the Form 1040, Corporates filling the Form 1120, Trust and States filling Form 1041 all can take advantage of the deferral. Apart from these the fiscal year partnerships, different associations and companies can also extend the tax deadline till 15th July 2020.

3. What needs to be done to get the extension?

You don’t have to do anything, as the given extension is for everyone. The whole country has been affected by the coronavirus. A tax accountant Los Angeles mentioned that this tax relief provides oxygen mostly to the small business owners.

4. Will I get a refund?

Often the clients ask this what will happen to their refund. You can be assured that you will get a refund within the 21days window. Treasury Department has ensured that people who will pay the tax within the deadline will get their refund within the speculated time.

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5. Can’t I file the tax before July 15, 2020?

A CPA Los Angeles mentioned that several clients are there who are already prepared for filing the tax. So, for them, it is not mandatory to wait until the 15th of July. They can pay the tax earlier. Remember that unless you are paying the owed tax, you will not be eligible to get a refund from IRS. The sooner you will file, the IRS will refund you. If you are falling short of cash, quick payment can resolve the cash issue.

6. What if I didn’t make enough money in 2018 and 2019?

IRS will scrutinize the 2019 Social Security statements which you employ will provide or the 2019 Social Security benefits provided by you to determine that are you eligible for the stimulus pay or not. However, even none of the above is applied to you, still, tax services Los Angeles recommend you to file a basic 2019 return for income. It will pass the message to IRS that you are not hiding any information. You can contact us also for the same to determine your eligibility for the tax.

7. Do I have to pay extra tax on the stimulus pay?

Fortunately, No. You don’t have to pay any tax on the individual stimulus payments. Further, you don’t have to pay any Social Security or Medicare tax on it.

8. What payments are covered in the extended deadline

It is a common query of the several taxpayers that what kind of payments the extended deadline cover. For them, here is the list. The extension covers all the normal associated interest, penalties (in case of failure to pay), and the income tax returns.

9. What about the state taxes?

Coming to the state taxes, these are solely guided by the state guidelines. Please refer to the guidelines of the state where you are working or staying. To know more about the state provided guidelines, please feel free to contact our tax accountant.

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10. What is the best way to file tax?

If you are comfortable, then the online option of the IRS is perfect for you. However, remember that a simple mistake can cost you a lot. It is better to take the help of a tax accountant Los Angeles to file your tax. However, for the basic, you can surely go for the online option. Some tax preparation software is also available, but it is better to taketh help of a professional.

How can we help you?

Over here in we have tried to answer some of the common queries that people have in their minds regarding extended tax deadlines. We know well that you may have still some doubts.

Taxation sessions are vast, and every business has its issues. If you are looking for a custom solution, please feel free to contact us at Jarrar CPA Los Angeles. Our tea of experts will be happy to help you.

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What Should You Know About Taxes During COVID-19 Crisis?

Restaurants and concerts are not the only places that are off limits for coronavirus. In fact, visiting your tax professional is probably out of the question, too.

Some states and localities have also imposed restrictions on social interactions as the number of COVID-19 cases is increasing to a rocket high: Thirty-eight states and the nation’s capital have issued stay-at-home orders.

Now, these rules have put tax CPA Los Angeles and tax preparers through a tough time. Even though the deadline for 2019 income tax returns has been pushed back to July 15, they’re still working hard to help clients’ with paperwork in a proper manner.

Further, an accountant is also picking apart the new COVID-19 relief law, helping filers prepare for the stimulus payments many are supposed to receive.

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Consider these points when deciding when to file and pay.

Prepare tax return and then decide

Rather than waiting till July, you must prepare the tax return (or ask your tax pro to do so) as soon as possible so you can weigh the options. If you have a refund due, in most cases you must not wait till July to file your return.

Additionally, if you owe the IRS and your state you would want to wait till July. This includes some states, which has really harmonized the deadlines with the IRS. Just ensure the money you owe is socked away in higher interest saving account for earning something on the cash.

Details on stimulus payment

The Coronavirus Aid, Relief, and Economic Security, or CARES, Act that was signed last month includes a stimulus payment for over 90% of households by some estimates.

The refundable tax credit is $1,200 per taxpayer and an extra $500 per child aged 16 or younger.

For instance, a married couple with two children ages 5 and 8 could qualify for a $3,400 payment. If you have received your previous refund through direct deposit, the stimulus payment should reach the same account.

Higher income earners would find the stimulus payment reduced or eliminated. Individuals with adjusted gross income, or AGI, over $75,000 and couples filing jointly with AGI exceeding $150,000 can get subject to the phase out rules.

For instance, if the married couple above had AGI of $180,000 in the last tax return filed, then they might receive a net $1,900 stimulus payment. Often the CPAs help in small business accounting so you can save more on taxes.

Now, when you come under that higher income category, you may want to wait to file the taxes if your income was lower in 2018. This stimulus payment is actually based on the last filed return whether it’s for 2018 or 2019.

Also, if on the other hand your income went down in 2019, you must consider filing as soon as you can to maximize the stimulus payment.

As per the latest news, there is apparently no “clawback” provision as part of the stimulus credit. When you qualify for 2018 and don’t for the next years, it is yours to keep. You can even collect this based on income in 2020 when you actually file taxes next year.

Note, you can only receive a stimulus payment based on one tax year — 2018. This is possible if that’s the last return filed, 2019 in most cases, and 2020 for those who haven’t qualified for this round.

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Children introduce additional factors

The best filing time may easily change if you have children who were born or turned 17 last year. The IRS looks at how many children less than 17 years of age you had at the end of the tax year.

If your child turned 17 in 2019, simply wait to file as it’s possible that you qualify for the $500 credit.

If on the other hand your child was born in 2019, you must file your taxes faster to hasten the credit.

Other changes in tax deadline

Along with the change in the tax filing date, the deadlines for 2019 Roth IRA, Traditional IRA, and health savings accounts simultaneously been extended till July 15.

Ensure To Avoid Scams

The IRS wishes everyone to know that the agency doesn’t ask for money back. It does not communicate through phone calls, text, or email.

Don’t provide personal or bank information to anyone who claim to work with the IRS, even if they claim they have amount to transfer in your account.

The coronavrius pandemic drags on. You might or might not receive more aid from the government. With the economy coming up, more illnesses would surely be on the way. So, just remain strong and follow safety guidelines.

Consider Paycheck Protection Program

Another crucial part of the CARES Act brings a program for helping small businesses pay the employees while the business remains closed due to this COVID – 19 pandemic.

This is what is considered a loan. Now, however, if the business owner uses at least 75% of the amount received to pay the employees and the rest is spent on work-related expenses including mortgage, rent or utilities, the loan gets forgiven.

Now, the first round of funding for the PPP had been used up shortly after the program was started. Also, the federal government has been working hard to pass the legislation to provide more financial aid and support.

If you can’t meet the 75% payroll requirement, your small business qualifies for a loan and you receive it. However, you just need to pay it back within two years at 1% interest.

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