How Will COVID-19 Affect Your Taxes?

If you are one of the many Americans who were affected by COVID-19 you may be wondering what will happen with your tax return. If you owed money to the IRS, you may be able to get back some of the money you lost through unemployment or business closure.

Piggybank with COVID 19 mask

If your business lost a profit, you are more likely to receive a return. Checking in with a personal accountant will ensure that you meet the qualifications for tax credits. If you filed your taxes beforehand you will not need to concern yourself with this year’s taxes, but you may need to consider your situation for next year’s taxes. As for now you and your family may be struggling to understand what COVID-19 means for your finances and day to day life.

Here are some responses to commonly asked questions concerning COVID-19 and taxes.

  • How long before tax returns are received? If you already filed your taxes you may still be waiting for a tax return if the IRS owes you money. Currently, the IRS is backlogged with returns as they are working to administer stimulus payments.
  • Do taxpayers get an extension? Tax payment deadlines for individuals have been extended due to COVID-19 through July 15th. Tax deadlines for different state taxes vary and may have already passed. Check your local state government website. For small businesses, trusts, and health funds the IRS has forms to fill out before July 15th.
  • How will small businesses cope with loss from COVID-19? Unfortunately, this year’s loss is not covered on your taxes, but stimulus checks for small businesses have been discussed. The CARE Act offers options for receiving aid for your small business. The U.S. Chamber of Commerce offers options to help pick the best loan or aid program for you. The forgivable loan program offers those a chance to regain what they lost trying to make ends meet after business closing.
  • Will COVID-19 affect how much money I receive on my state tax return for this year? It should not because the taxes you are filing this year are based on last year’s income. For businesses, check in the following year to see which states will provide relief. Check your local government website for specific state information.
  • How will taxes affect the following year’s taxes? No doubt loss of income and aid offered will be questioned in the taxes for the following year. Stimulus checks will not be taxed next year. In order to prep for next year, keep track of all your profits and losses. If you lose your business keep track of loss of income, evictions, and other important documentation.

These times are trying. Keep in touch with your local government and tax representative for any updates. Don’t Panic! Call Joe Franek!