Unemployed or Furloughed During COVID? You May Need Tax Relief Help this Year
Taxpayers who received unemployment benefits or dug into retirements might be in for a surprise when tax time rolls around. Tax relief help could be the answer for those who may unexpectedly owe income tax come April 15, 2021.
Getting to the Heart of the Problem
The COVID-19 pandemic has led to an unprecedented number of people getting laid off or furloughed from their jobs. With the national unemployment rate soaring to 14.7% in April, more people have been put out of work than have been since the Great Depression in the 1930s. At various points during the COVID crisis, Nevada experienced some of the highest unemployment rates in the United States.
For those who have never collected unemployment insurance before, it can be easy to overlook that they
Adding to the
What About Early Withdrawals on Retirement Funds?
Under normal circumstances, taxpayers would be taxed and be subject to penalties for making early withdrawals from certain retirement accounts. The Cares Act gives taxpayers up to three years to pay those taxes and receive a refund on taxes paid on that money if they redeposit the money within three years. The 10% early withdrawal penalty and 20% federal withholding on distributions are waived for those who have or have a dependent that tested positive for COVID-19. Penalties will also be waived for those who experienced financial difficulties due to being laid off or working reduced hours as a result of COVID-19.
Heading Off a Widespread Problem
Taxpayers who have not set aside money to pay the taxes that will be due when they file their federal taxes may
It is a good idea for taxpayers who think they may be in tax trouble to act before tax day arrives. When possible, making estimated tax payments could help make up for the withholding deficiencies. Other tax relief help to consider would be setting up a payment plan or in cases of extreme financial difficulties, making an offer in compromise.
