Sitting down with a nice cup of coffee, confusing forms with strange combinations of numbers and letters sent to you by the government, and racking your brain to recall everything that’s changed in your life in the last year…ah, yes! It’s tax season! To cap off an already challenging and confusing year, it’s time yet again to file taxes. But don’t despair, seasoned tax professionals Susan Lenz and Mike Anselmo from Iacopi, Lenz & Company have some tax tips to help you navigate this year’s taxes.
The Economic Impact Payments (EIP) or “stimulus checks,” might affect your taxes this year. Mike explains; “They are an advance against a 2020 federal tax credit and as such are not taxable for Federal or California purposes. The amount of the advance credit was based on information reported on the individual’s 2019 return. If the 2019 return had not been filed at the time the advance credit was issued, then the 2018 return information was used. The EIP credit will be reconciled and reported on the individual’s 2020 return using 2020 information. If the advance amount was less than the actual credit, the individual will be due an additional credit on their 2020 return. If the advance amount was more than the actual credit, taxpayers will not be required to repay any of the credit. All individuals who received a stimulus check should have received IRS Notice 1444, which details the amount they received.”
Whether or not you received a stimulus check, 2020 has been very different for most folks. Mike and Susan’s best advice is to seriously consider going to a tax preparer this year. If people decide to self-prepare, Mike says, “it is essential that you study the changes in the tax law by reading articles on 2020 tax preparation.” However, if your return is not likely to be straightforward, find a tax preparer who is well informed, trustworthy, and has good communication skills.
While the tax deadline to either submit a fully prepared return or to pay your taxes in 2019 was extended to July 15, 2020, there has not been any official statements that any kind of blanket extension to the deadline will happen again for 2020. It’s best to get ahead of the game by collecting your forms, considering your options of self-preparation or going to a professional, and making that decision as soon as possible.
Iacopi, Lenz & Company Accountancy Corporation
3031 W. March Ln., Stockton