Tax expert: Why refunds and filing might look different this year

Michigan

GRAND RAPIDS, Mich. (WOOD) — Tax season can be confusing, time-consuming and often times frustrating. For some, it might be even more challenging this year, especially if you found yourself unemployed for possibly the first time in your life.

“I can usually just put my tax information in, my W2 or whatever and hit submit no problem, but this year it’s like you have to make sure all the steps are correct. Make sure you’re claiming everybody, make sure you’re giving them all the information they need so there’s no problems whatsoever,” said Dannieyelle Armstrong.

She’s currently in the process of finalizing her return before she submits it. Armstrong’s hours were cut from her job during the pandemic, so she collected Pandemic Unemployment Assistance payments for a couple of months. When she put in all her information to file, she noticed her return was smaller than normal. 

“My federal was a couple thousand lower and my state was about a thousand dollars lower,” she said.

Armstrong posted on Facebook in the Michigan unemployment public help page to see if anyone else noticed the same. 

“I found out I wasn’t the only one,” Armstrong said. 

More than a million people received unemployment compensation in Michigan in 2020. The IRS says some of those taxpayers might be unaware that those payments are taxable. That includes the extra $600 per week in PUA.

Stacy Kevern, regional manager at Integrity Tax Group, however, says a lot of people might not realize there is a new rule this year for those who received unemployment payments in 2020. 

“You can possibly use your earned income from last year to qualify for some credits that might be more advantageous to use last year’s income than this year’s income,” Kevern said. 

According to the IRS, a person can choose to use their 2019 earned income to figure the Earned Income Tax Credit if their earned income was more in 2019 than in 2020. This change might help workers get bigger tax credits and larger refunds when they file their 2020 tax returns this year. The same goes for the child tax credit. 

Additionally, if your job is in the city of Grand Rapids but you’ve been working from home in the suburbs during the pandemic, you may be able to get out of paying city income taxes.

“All you need is a letter from your employer,” said Kevern. 

With the potential of a third stimulus payment, some people are also hesitant to file until after those checks are sent out since it’s based on your income and most recent tax return. Kevern said that will vary from person to person. 

If you do decide to file on your own and are confused or surprised by your refund, Kevern said it never hurts to get professional help. 

“Don’t just wing it. Give us a call, give a tax professional a call. We’re happy to help we’re happy to answer questions,” said Kevern.

More information about changes to 2020 tax returns can be found here

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