How are my taxes affected by the coronavirus (COVID-19) pandemic?

The Coronavirus Response and Relief Supplemental Appropriations Act of 2021 — a $900B relief package delivers a second round of economic stimulus for individuals, families, and businesses.

The package provides relief through multiple measures and expands many of the provisions already put into place under the CARES Act, including a second round of direct stimulus payments to individuals and families.

Stimulus payments are based on information from your 2019 or 2018 tax filings. But, the amount you were paid will be reconciled on this year’s tax return based on your 2020 situation.

If you didn't receive the correct amount of stimulus payment, you can claim the Recovery Rebate Credit when you file your 2020 taxes and it will provide the same amount of payment as the stimulus would have. Total Tax Plus will guide you through this to make sure you get every dollar you deserve.

How will the second stimulus affect my taxes?
The Economic Impact Payments (both the first and second) are not considered income, and therefore are not taxable. They won’t reduce your refund or increase what you owe when you file your taxes this year. They also won’t affect your eligibility for any federal government assistance or benefits.
How does the new law affect my Earned Income Tax Credit?
There is a special temporary rule allowing individuals to use their earned income from tax year 2019 to determine their eligibility and amount of Earned Income Tax Credit and the refundable portion of the Child Tax Credit (i.e., the Additional Child Tax Credit) in the 2020 tax year. Total Tax Plus will help you to do this when you file your 2020 tax return this year.
Will I owe taxes on my stimulus payment?
No, your stimulus payment isn’t taxable. It won’t reduce your refund or increase what you owe when you file your taxes this year. It’s also not considered income, so it won’t affect your eligibility for any federal government assistance or benefits.
What if I never received my stimulus payment or the amount was different than what I expected?
If you didn’t receive the correct amount of stimulus payment, you can claim the Recovery Rebate Credit when you file your 2020 taxes and it will provide the same amount of payment as the stimulus would have. Total Tax Plus will guide you through this to make sure you get every dollar you deserve.
What if I withdrew early from my retirement plan?
If you needed to take money out of your retirement plan, keep in mind that the 10% early withdrawal penalty may be waived on up to $100,000 of retirement funds withdrawn if you are a qualified individual impacted by coronavirus. Contact us to know if you qualify.
Does the coronavirus outbreak qualify as a natural disaster?
Effective March 13, 2020, the COVID-19 pandemic is a qualifying natural disaster.
Can I access a sick family member's Total Tax file to help them prepare their return?
To ensure the protection, privacy, and security of customer account information, Total Tax Plus is only able to assist account owners in accessing their account.
I can't go to your office because of the city-wide shutdown. Can you help me?
Yes. Consider Total Tax Plus Online. It includes unlimited tax advice for a specific area on your tax return or you can even hand off your tax return for a line-by-line service. And, your taxes are guaranteed to be done right.

Updated: January 10, 2021

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