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I-TEAM: Report shows filing 2020 taxes is more challenging than last year

Published: Mar. 18, 2021 at 6:08 PM EDT
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AUGUSTA, Ga. (WRDW/WAGT) - “Nothing in life is certain but death and taxes” until a pandemic hit.

The doors at Intrigue Salon in North Augusta are open, but business here is still nothing like 2019. The salon is empty except for me, my photographer, and my hair girl, Jenna Duggan.

“Some days it is pretty slow,” she said. “We have to be cautious about how many people we can have in the salon because we can’t go over ten.

“How did that impact you financially?” I asked.

“Oh tremendously.”

A $20,000 loss to be exact.

“Oh yeah, we were closed March 21, because I remember my last... I was doing a wedding on March 21. It was a Saturday and that was the last thing I did for almost two and half months,” Duggan said.

Self-employed, non-essential businesses took a big hit in 2020. Not only did they lose wages but they also struggled longer than most to get unemployment benefits.

“Lord that was very challenging,” Duggan said. “So when you own your own business you do not get approved for the basic unemployment so we had to wait on the PUA to come out.

PUA or Pandemic Unemployment Assistance couldn’t have come any sooner. The unemployment benefits helped her survive until she could earn money again.

Duggan was one of more than 20,000 workers in the CSRA who claimed unemployment last April, one month into the shutdown.

“Thousands of Americans have been unemployed both last year and continuing into this year it’s a very serious situation for a lot of families,” Julie Sforza-Smith said.

She is the program manager at the tax institute at H&R Block. A recent study by H&R Block uncovered 56 percent of Americans have more tax questions than last year due to the pandemic, with unemployment topping the list.

“When you receive unemployment compensation, it is taxable on the federal return. It’s also taxable on most state returns,” Sforza-Smith explained.

And Duggan did elect to have taxes taken out of her unemployment checks so she does not owe this year. However, many gig workers are new to unemployment and did not know to check that box and will owe.

“Your unemployment compensation is reported to you on a document called a 1099G, these are issued by state agencies or department of labor. You can’t file without it,” Sforza-Smith explained. “A lot of people are waiting on that 1099-G to show up in their mailbox.”

People who received unemployment in the Peach State will continue waiting too.

States are overwhelmed by processing unemployment, so it’s possible you may not get that form in time. You don’t need the actual 1099G form to file, but you do need the information on it.

Here’s how you get it:

Login to your account with Georgia’s Department of Labor. It will show how much unemployment you received and the amount of federal and state taxes deducted.

In South Carolina, this data is on the Department of Employment and Workforce’s website.

Regardless of employment status, taxpayers need to get organized now, starting with their stimulus payments.

“What people really need to understand about those two payments is that even if you received some or all of it that’s not the end of the story these payments need to be reconciled when you file return now,” Sforza-Smith explained.

And she says filers need to fill out line 30 of their 1040, even if they did not receive a stimulus check: Just enter zero. If you skip line 30, then you risk skipping a recovery rebate credit.

Don’t remember the exact amount you received in stimulus money last year? No problem.

Go to IRS.gov and click on “View your economic impact payment amounts” Sign in and then go to the records tab on your account.

Amounts will show up as “economic impact payment” and “additional economic impact payment.”

Small business owners here in the CSRA who took out loans under the payment protection program can breathe a sigh of relief too.

Georgia and South Carolina are two of 25 states not taxing forgiven PPP loans, and neither is the federal government.

“Knowing what you are facing early is always better than later because there is still time to handle those unexpected situations,” Sforza-Smith said.

Duggan avoided the unexpected by having taxes taken out on her benefits before she ever got cash in hand. She says she can’t afford to cut any more losses.

“Trying to build your business back up from being off of work for size months and only able to work three days is very difficult.”

If the numbers don’t add up, do not ignore it. Many taxpayers are discovering someone filed for unemployment under their name when they go to file.

If this happens you need to contact the unemployment office in your home state right away.

The treasury department has extended the deadline to file federal income taxes to May 17.

QUICK LINKS

You can look up their EIP payments received on irs.gov.

Unemployment compensation recipients can look up their state 1099-G:

Click here to access the Tax Calculator

Click here to access the Tax Prep Checklist

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