Actions

Financial impact of pandemic may complicate your tax season

Tax Season Begins
Posted at 5:00 AM, Jan 20, 2021
and last updated 2021-01-20 07:24:16-05

KANSAS CITY, Mo. — The financial impact of the pandemic will make tax season a bit trickier for some people.

Collecting unemployment, joining the gig economy or working remotely can all affect the filing process.

"For people who have never received unemployment income before, they may not know that that income is taxable," H&R Block Chief Tax Officer Kathy Pickering said.

People who were unaware of that fact may not have opted to have taxes withheld, which could lead to a big bill this tax season.

States will provide 1099-G forms showing total unemployment income, which must be reported on tax returns.

Pickering pointed out it's important to keep in mind that those who had major changes in income may also be eligible for tax credits.

"If you've never done this before, it's a great time to get some help," she added.

The same goes for people who entered the gig economy in 2020, driving for grocery or food delivery apps.

"You're self-employed, and you're responsible for paying the taxes on the income that you're earning," Pickering said.

Those who missed estimated quarterly payments may face penalties at tax time.

At the same time, gig economy workers can save by writing off expenses, so it's a good idea to keep track of money spent on things like gas and car insurance.

The last big factor that will impact tax season is remote work.

Of course, working in one state and living in another is a familiar predicament for people living in the Kansas City metro.

"You're going to want to make sure you know the rules both for the state you would normally work in and the state where you're working from home or teleworking from, just to make sure you understand," Pickering said.

Both Kansas and Missouri require returns in both states if you live in one and work in another.

If you want to work with a tax professional but don't feel comfortable meeting in person, H&R Block provides virtual tax preparation. Offices are also open, with extra precautions like Plexiglass dividers and limited staffing.

Find free tax resources here.

The Rebound Kansas City is our effort is to help metro residents play a role in moving our community forward. We would love to hear your thoughts and ideas to via email to rebound@kshb.com and we welcome you to join in the conversation on the Rebound KC Facebook Group.

Whether you're Getting Back to Work after a layoff, need help Making Ends Meet during these trying times or need tips on Managing the Pressure we're all feeling, The Rebound has resources to find help. We'll also make sure local leaders are Doing What's Right to get Kansas City back track after a three-month shutdown.

Need a job? Be sure to visit our local jobs board powered by Indeed.