Many Iowans will soon be starting the process of filling out their state and federal tax returns, as those W-2 forms should be arriving in our mailboxes by the end of the month.
Urbandale CPA Jeff Strawhacker says there are very few major changes for the 2020 filing season and this round of tax forms is much like those from the 2019 season. Still, Strawhacker notes, 2020 was no ordinary year — for virtually anyone.
“A lot of people were receiving unemployment benefits during the shutdowns and the pandemic and they may still be receiving those,” Strawhacker says. “Unlike stimulus payments, unemployment benefits are taxable and if taxes were not taken out of those benefits, they may have a little bit of tax to pay when they file their returns.”
The latest round of federal stimulus checks, as with the first round, are not considered taxable income for federal or Iowa purposes, Strawhacker says, so “it’s tax-free money.” However, some people didn’t get a first stimulus check last March or they didn’t get as big a check as they should have received.
“On the 2020 returns, there’s a reconciliation process where you calculate the amount that you were eligible to receive, based on your 2019 income, and then you compare that to what you actually received,” Strawhacker says. “If there’s a difference, you may have a little extra money that you can claim as a credit on your 2020 tax return.”
With the pandemic, more people are spending more time working from home which may afford them more flexibility with their daily activities. Will many Iowans be using that extra time to tackle their taxes?
“I’m hoping more people will do them earlier because they’ve had some time at home to maybe gather documents or organize things a little bit differently,” Strawhacker says, “but nobody likes to file their taxes before they’re actually due, so I would anticipate we’ll see kind of a normal process with a lot of people pushing that deadline as close as they can.”
While the deadline to file federal tax returns was extended to July 15th last year, it’s currently scheduled on the standard day in 2021 of April 15th, with Iowa taxes due April 30th.