Taxes can be tough to figure out in normal times, but this year is going to be even more of a head-scratcher.
There are a lot of questions around what people owe taxes on, and what they don’t. Are taxes paid to the state where offices are located or to the states where people live? And when can people file their taxes? When might refunds come?
Patrick Thomas, founding director of Notre Dame Law School’s Tax Clinic, said this year is going to be especially tough.
“There are so many factors that go into the determination of state tax residency,” he said. “But this year, it’s going to be even more complicated.”
Thomas said because so many people worked from home this year, taxpayers may have to do more research and paperwork. Some states are fighting over who gets to collect tax revenue for people who live and work across state lines.
There are a couple of things we do know. Stimulus checks are not taxed. But unemployment benefits are taxed, both at the federal level and by some states.
“When you get your unemployment check, you want to make sure that taxes are being set aside or that taxes are being withheld to pay the federal taxes,” said Ariel Jurow Kleiman, an associate professor of law at the University of San Diego.
She said that with 10.7 million people out of work, there are a lot of folks who have never collected unemployment before, so they need to be aware of that.
Another difference this year is that the IRS will not be accepting federal tax returns until Feb. 12. Andrew Hayashi, director of the Virginia Center for Tax Law, said that means people will have to wait longer for that check from the IRS.
“Low income households who claim the earned income tax credit rely on that to kind of get current on some of their holiday bills,” he said.
Usually, many of those families would file their taxes the first week in January, Hayashi said, but now they can’t. The April 15 deadline, however, currently remains unchanged.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.