The ongoing Coronavirus pandemic has caused tremendous upheaval not only here in America but across the globe. As countries continue to reel from the virus and its impact on individuals' lives, day-to-day tasks, and their respective economies, a few steps have been taken in order to help ease the burdens associated by its devastation here in the United States. The Payroll Protection Program (PPP) was initiated by Congress as part of a larger measure, in an attempt to help small businesses stay afloat as multiple facilities across the country were forced to close for unknown amounts of time. During these closures, unemployment claims skyrocketed as not only businesses but people were hurting.
That larger measure consisted of the Coronavirus Aid, Relief, and Economic Security (CARES) Act which was passed in late March as a measure to assist with the strife facing a majority of citizens. Part of this process was $1200 stimulus payments for qualifying individuals, in addition to a $600 Federal Pandemic Unemployment Compensation for those who applied and received these benefits. Tax payments and filings were extended from their typical mid-April deadline until July 15 for the 2019 calendar year but how will these new measures impact your 2020 filings. As Congress considers another round of stimulus payments and debates the extension of these unemployment payments, exactly how each will be recorded when you file a tax return next year is something to consider now.
Those who have been or are currently receiving unemployment benefits should understand that while these payments are not subject to certain taxes, others still apply. When earning a traditional check from an employer, FICA taxes which include Medicare and Social Security under the Federal Withholding are removed and paid by your employer. These are not subject to unemployment benefit payments but any money being received as a part of the unemployment benefit still counts as income to their recipients. As a result, individuals will be expected to file their received amounts as earned income on their 2020 tax return next year.
The Senate unveiled second stimulus check details recently, but how will these direct payments impact your 2020 tax return
? Many taxpayers were earlier issued $1,200 including an additional $500 for qualifying dependents, and something along those same lines is anticipated for these second-round payments. These amounts are not registered as taxable income but instead a credit with eligibility based off previously filed returns. For this reason, those who were in receipt need to file their 2020 taxes in order to ascertain the appropriate amounts were applied. For a majority of Americans, this means that the stimulus payments should not have any impact on their upcoming return filed next year.
If you are in need of a particular level of support for personal or the finances of a business then let the tax and experts at Bloch Rothman and Associates assist you today. In addition, they can also take care of multiple other issues dealing with paying or owing back taxes, required audits from other entities besides the IRS, or any other personal or corporate wealth management issues. Along with providing a quality tax service, our group can also complete tax returns or answer any other factors associated with financial issues or concerns you may have. Serving in Denver and all of the surrounding areas for 35 years, our firm has an extensive history in helping clients with any and all of their tax issues or dealings with the Internal Revenue Service. If you have questions about your personal, business, estate or any other filings, don’t hesitate to contact us today. Available for all of your tax needs and filings, there are also a number of bookkeeping and payroll services offered to assist you and your business. We look forward to meeting you and serving whatever your needs may be soon!