COVID-19 pandemic may affect the way you file your taxes

Tax Season Begins
Posted at 4:26 PM, Feb 10, 2021
and last updated 2021-02-10 19:52:40-05

NASHVILLE, Tenn. (WTVF) — The IRS will start accepting tax returns Friday, February 12 but the COVID-19 pandemic may affect how you file.

If you lost your job last year, your unemployment benefits are federally taxable. However, the two rounds of your stimulus payment are not taxable. Remember if you haven't received your stimulus payment yet, you can claim it when you file.

Another change you'll see affects those who took money out of their retirement fund early. Normally you would face a 10% withdrawal penalty, but because of the coronavirus federal relief package that passed last year, people can withdraw up to $100,000 from retirement accounts with no penalty and take up to three years to pay any associated taxes if the virus affected you and your family.

"The pandemic has affected so many people, I have never seen so much unemployment come into the office," said Renee Roberts the owner of Fax Tax of Inglewood.

For those who did keep their jobs during the pandemic, many were forced to work from home. Unfortunately, only a few will be able to claim their expenses for their new home office setup.

That’s because the home office deduction can only be taken by businesses or those who are self-employed.

But there is another feature this year - taxpayers will be able to use their earned income from 2019 to qualify for earned income credit.

"Because of unemployment and people being laid off, their earned income credit and child tax credit has been affected so the IRS has allowed them to either take 2019 adjusted gross income or 2020 whichever helps them with those credits more," said Roberts.

You have until April 15 to file your taxes this year.

If you had a hard time last year, you might be able to get free help doing your taxes.

The United Way is offering free tax preparation through the Volunteer Income Tax Assistance program. Visit or call 211 for more information.