You may not have to pay back your stimulus checks, but more tax changes are coming

FORT WAYNE, Ind. (WANE) – Tax Season Begins late this yearand there are a number of changes to tax laws in addition to stimulus checks and the continued spread of COVID-19.

“A lot of people won’t be happy,” Apple Tree Financial Group managing partner Keith Layman said. “I know a lot of customers use it [refunds] to save then it’s their savings, their vacation money, their home improvement money, whatever it is. So there will be disgruntled people who will become the filing time.

One of the biggest changes this year is how taxes will be prepared. Instead of making an appointment with a CPA or tax professional in person, many places ask clients to email their documents, leave them in the mailbox, and then conference in on Zoom.

Luckily, you can prepare your taxes early even though the IRS won’t start accepting returns until February 12. The delayed start date is due to the IRS’ need to program and test IRS systems due to changes in tax laws. The last day to file has not yet been pushed back from April 15. However, this could change due to the pandemic.

Layman says the best way to file taxes is electronically. The main reason is that this is how the IRS asks for taxes.

“They don’t really want paper or paper returns anymore,” Layman said. “The second is that it’s easy to follow and therefore less likely to get lost in the post. It’s not that you can’t get a refund, it’s just a lot easier and faster for taxes.

If you haven’t received your stimulus check, you may have mailed your tax returns. So far, the majority of Americans have received two stimulus checks.

In the first round of stimulus checks, recipients were supposed to have received letters from the government stating the amount they had been granted. Tax preparers will need to know how much was received, because if you didn’t receive enough, you’ll get the difference back as a refund.

“If you earned a little less income in 2020, you might be entitled to more or you had a child in 2020, so you’re entitled to more, so those are things that will be different,” Layman said.

But will we have to pay it back?

When the stimulus checks were first issued, officials said people wouldn’t have to pay it back. The IRS still claims that taxpayers won’t have to pay it back. However, Layman says that may change.

“That was one of the questions we had as preparers was do I normally owe $2,000, do I now owe $3,200 and [the IRS] claims no, but again, we’ll see once we start filing,” Layman said. “Having done this for several years, I know what they say versus what the IRS handles can be very different.”

Layman says the only people who will have to pay back stimulus checks will be widowers from now on.

If your spouse died in early 2020 before COVID, and you then received a stimulus check that was for you and your deceased spouse, the IRS says you must repay the portion that went to your spouse because he wasn’t with you when COVID hit.

Newly elected President Joe Biden has a plan to first time home buyers, giving newbies up to $15,000 to request a down payment. The tax credit is modeled after a tax break for homebuyers that was implemented by then-President George W. Bush in 2008 during the Great Recession. However, Bush was an $8,000 loan that you pay off on your tax return over 10 years.

Biden’s tax credit is a cash refund a buyer can get right away. If you wanted to buy a house in February, you can get the money and use it for a down payment instead of waiting for the tax credit in 2022.

“It’s best to get it upfront if you’re really planning on putting it home,” Layman said. “You might have $15,000 to deposit, which might help you with the [private mortgage insurance]. In my thought process, it would be best to do this from the start to have more equity in your brand new home. »

Biden has also offered several tax credits that he says will help stimulate the economy. One of those plans is a 401K, which instead of giving you a deductible, the government would give everyone a tax credit. For example, let’s say you put $1,000 in your 401K, instead of hitting a deductible, you’ll get a tax credit. Layman says details are still in the works.

Another plan is to eliminate the increase in the cost base. This means that a beneficiary who inherits assets that have grown significantly during the deceased’s lifetime will likely have to pay much higher taxes when the asset is later sold.

“That’s one of the biggest downsides for all taxpayers would be the progressive base,” Layman said. “But some of the others are good. Homebuyer’s credit I mean wow and right now if that doesn’t change how they define a homebuyer it’s not just that’s the first home you’ve ever brought . If you haven’t bought a home in the past five years, you’re a first-time home buyer.

Layman’s advice to those filing taxes is to be patient, do them early, and have them done by a tax professional.

“You may have to be patient,” Layman said. “COVID really threw the IRS for kind of a loop last year. The tax office has closed like everyone else. So there are people who were upset because their stimulus checks arrived 7 months later, and there are still people who still haven’t received their first set of stimulus checks. It’s all done by the Treasury which is the IRS. So if we get another stimulus check in February or March, it starts to overwhelm the IRS which also does tax reporting.

About Wilhelmina Go

Check Also

Arkansas woman charged with nearly $2 million COVID-19 relief fraud

This is an archived article and the information in the article may be out of …