COLORADO SPRINGS — Helping you to rebound from the impact of the pandemic, News5 is working with tax experts who understand preparing for tax time this year may come with some new questions and challenges you've never faced before.
The pandemic has impacted everyone and some people in more challenging ways than others. With work situations changing in the last year, some people had to change careers or even collect unemployment. Tax time may look a bit different this year for many people here in southern Colorado.
Local tax experts say they're already seeing more and more people calling with questions as their workload picks up. While many of the questions have straight forward answers, the unique situations some businesses and people find themselves in are at times needing more work to get things figured out.
"Right now I have to have about eight screens open and I have to go to different websites to figure out all the different changes. Some of the changes we have we haven't even gotten guidance on. Congress writes three sentences on some bill and we need 3,000 pages to interpret it for us," said Jason Watson, a tax professional with WCG in Colorado Springs.
In Colorado specifically, we've done a lot of reporting on the unemployment fraud people have dealt with. Tax experts say it's so important to file fraud claims to avoid any headaches with the IRS and to make sure it knows if you didn't apply for or collect unemployment.
"We can't file your tax returns until we figure that out because the IRS is just going to kick it back. In July and August they are going to do their data base comparisons and say look you filed a tax return with this income on there," said Watson.
Many people trying to make ends meet during the economic challenges of the pandemic may have taken on gig work for the first time driving for companies like Uber, Lyft, or Door Dash. Working as your own boss in those situations, tax pros say if you aren't used to having a tax bill you need to be prepared.
"It can be pretty expensive pretty quick if you aren't used to that. If you are used to a W2 environment where all your taxes are taken out. You spend what make if you will and you put some money in savings or whatever. Now, you're getting big fat checks from Uber and if you think the same thing it's going to blow up at tax time," said Watson.
And what about if you've been working from home for almost a year now? We know expenses come with that, but when it comes to the tax code experts say only those who are self-employed will be eligible for any kind of a write off.
"With the tax cuts and jobs act that came out in 2017 those home office expenses now for a W2 individual are no longer deductible at all, zero," said Watson.
Tax experts say if you're working from home you're better off working with your employer to see what expenses you can get help with, or even covered.
If you did have to draw unemployment in the last year, that money is taxable too, so you need to be prepared for a tax bill of your own.
Here are some additional resources to help you tackle tax time in 2021:
https://www.irs.gov/
https://www.360financialliteracy.org/
https://wcginc.com/
