JERSEY CITY, NJ, January 12, 2021 / PRNewswire / – The 2020 tax year was unprecedented in many ways, which according to tax experts at Jackson Hewitt Tax Service® is likely to surprise taxpayers who don’t plan ahead. Many taxpayers expect a flat tax refund each year, but there are many reasons why tax refunds could be lower or why taxpayers could remain taxable April 15, 2021.
For many Americans, filing their tax return is the largest single financial transaction of the year, and the lack of a tax refund can be a concern as many taxpayers count on that tax refund every year, he said Mark Steber, Chief Tax Information Officer at Jackson Hewitt. “If a taxpayer receives unemployment benefits, becomes self-employed, or has some sort of job change in 2020, they could get less or no tax refund that tax year.”
According to a recent Jackson Hewitt survey, only 20% of taxpayers know what the impact of their tax refunds due to employment changes will be in 2020. To better manage refund expectations, Jackson Hewitt encourages taxpayers to prepare and file early to understand their tax situation. Taxes owed are only due after the tax period has expired April 15thIf taxpayers prepare and file early, they have time to prepare their finances.
Jackson Hewitt shares the top three reasons why a tax refund may be lower than expected this year.
- Unemployment benefit. Like any other source of income, unemployment benefits are subject to federal and state taxes. State unemployment benefits as well as the additional 600 dollars one week of coronavirus relief counts as taxable income. However, income tax is not automatically withheld from this income, which means that taxpayers must have chosen or chosen to have tax withheld from their unemployment benefits. Since most unemployed taxpayers do not choose to have tax withheld from their benefit payments, they can expect to owe taxes on that income.
- Independence. Lots of people started their own business in 2020 to make ends meet and there is a tax impact on that income. Regardless of the secondary employment, the earned income must be shown in a tax return. While the self-employed have substantial tax deductions and tax benefits, taxpayers must make estimated quarterly payments on this income when at least they have earned 400 dollars. Failure to pay taxes correctly can result in penalties and interest charges.
- To work from home. Many taxpayers who worked from home in 2020 may believe that they can claim their home office as a deduction on their 2020 tax return. However, due to changes in tax legislation in 2018, it is not possible to work from home as an employee. However, self-employed taxpayers, whether full-time or part-time, can receive a home office allowance.
Jackson Hewitt also encourages taxpayers to continually look at changes and benefits in tax law. This year, many taxpayers may have received a stimulus check or economic impact payment based on 2019 tax returns. The latest tax bill, which was only passed in December and included stimulus payments for select taxpayers and some other safe harbor provisions for taxpayers with earned income tax credit offering options and help, is one reason why taxpayers are on the move about changes to tax law Should stay up to date.
For taxpayers who didn’t get a second boost due to an IRS bug, you can expect to receive their payments in early February. The IRS has confirmed that affected taxpayers will have their payments processed once their systems are back online February 1st. Taxpayers who have not received the full amount of the stimulus payment they were eligible for can claim the refund credit when filing their 2020 tax return.
During the 2020-2021 tax season, Jackson Hewitt offices are committed to protecting their customers, employees, and communities with security protocols that comply with local, state, and federal guidelines. Jackson Hewitt offers many filing options. Make an appointment at your nearest location to submit it to an office, hand in your documents or archive them from the comfort of your home Jackson Hewitt Online or Tax Pro from home. Visit jacksonhewitt.com to learn more about how to submit to Jackson Hewitt.
About Jackson Hewitt Tax Service Inc.
Jackson Hewitt Tax Service Inc. is an innovator in the tax industry committed to providing its hard-working clients with access to simple, affordable solutions for managing their taxes and tax refunds. Jackson Hewitt is dedicated to helping customers and stands behind his work with our Guarantee of Maximum Refunds and Lifetime Accuracy® (restrictions apply, see Jackson Hewitt’s website for more details). Customers can choose to submit at any of Jackson Hewitt’s nearly 6,000 franchise and proprietary locations, including 3,000 in Walmart stores and online. This allows customers to file their taxes easily and conveniently. For more information about products, services, and offerings, and to locate a Jackson Hewitt office, visit www.jacksonhewitt.com or call 1 (800) 234-1040.
The Jackson Hewitt survey was conducted online by Dynata on November 30, 2020under 1,000 American adults aged 18 and over. The respondents were selected from among those who volunteered to take part in online surveys. One thousand complete surveys were collected using the sampling frame based on US census data for age, race, gender, region, and income.
SOURCE Jackson Hewitt Tax Service Inc.