Hi Everyone! Cordelia here to answer the burning question, "why is my tax return taking so long"...Well this answer is not applicable to everyone, but many of you are on hold because of Unemployment. Right now the IRS is saying NOT to file an amendment because of unemployment.
What does unemployment have to do with anything you ask? Well, in the latest and greatest stimulus bill, they announced that the 1st $10,200 of Unemployment will not be taxable. WHAT? HOW? WHY? well those are all GREAT questions!
WHAT? SO the what is pretty simple, they made a one time concession (well right now it's one time but it may happen again next year..that is just my guess) to give some extra financial give to people who received unemployment in 2020. Many people were receiving less of a tax return because once you added unemployment it pushed people over the cliff for qualifying for certain things..or in some cases pushed people into new tax brackets. So the what is that the 1st $10,200 of unemployment is not taxable. So for example, if you got $18,200 in Unemployment you would pay taxes only on $8000. If you received less than the $10,200 then your unemployment is fully non-taxable at the Federal end.
WHY??? So for me, the real question has been why. In my mind, if you were getting unemployment it would be to REPLACE money that you would have been earning which would have been fully taxable...so I have difficulties wrapping my mind about the why part...However, the techical answer is this...Stimulus money was not designed to be taxable, it was designed to be tax free and stimulate the economy. The government at one point issued an extra $600 a week add on for many people while they were collecting unemployment. The $600 a week was direct stimulus aid...therefore the logic is that it should be non-taxable as well. I still don't really get it...but I will take the win because it helps so many of our people and well that is all that really matters!
HOW!!! So the how is still yet undetermined. If you have not yet filed, that part we know..we have a special way we can go in and deduct the proper amount of money. IF you have already filed, then just be prepared to get a phone call or email from us advising you what is going to happen. Right now, many tax returns are being held up while the IRS decides how they are handling the mid-season tax change. There has been talks about having to amend the return if you have already received your funds..but there has also been talks about the IRS doing an automatic 2nd round payment...so we have not been given a full answer as of yet.
Here is an article for more information!