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Tax season 2021: What you need to know

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COLORADO SPRINGS, Colo. (KRDO) -- The IRS officially began accepting and processing tax returns for the 2021 season on Friday, but circumstances caused by the pandemic may affect people's returns.

"We’re seeing a lot of people’s situations have changed drastically. Whether it was W2’s, then they were on unemployment," Amanda Hill said, with Jackson Hewitt Tax Service. 

According to Hill, stimulus checks are not considered taxable income. However, people will still need to include the information in their filing.

For others who are still waiting on their stimulus payment, Hill said filing now could help get it quicker.

"Let’s say they didn’t get what they should have gotten. Then what will happen is, you include that on your tax return under the Recovery Rebate Credit and you can get the full amount of what you hadn’t received yet."

However, Hill said the same can't be said about unemployment benefits, which are considered taxable income. She recommends Coloradans be on the lookout for multiple documents too.

"Here in Colorado, there is a possibility that you could receive two 1099-G’s depending on which part of the extra federal unemployment that you received."

Nate Tassler, who leads the Pikes Peak Community College free tax program, said another common question this year concerns side jobs people may have taken to help offset any financial strain during the pandemic.

"If you have self-employment income, you would need to do a Schedule-C and you might end up paying self-employment tax on it. This is another place where people can be caught unaware," Tassler said.

Guidance for small business owners who took out Paycheck Protection Program loans has also changed.

"The latest legislation that passed in December clarified that PPP loans are not taxable income when they’re forgiven and that you can deduct the expense you spent the loan on. A good outcome for business owners."

While most people worked from home at some point during the pandemic, Hill said it's unlikely they'll be able to write off home office expenses.

"If you’re a W2 employee there’s really nothing that you can write off. But, if you’re self-employed, then you can write off your home office and other expenses that you have for your self-employment," Hill said.

 The Pikes Peak Community College free tax program is open Saturdays from 8 a.m. - 4 p.m. through March by appointment only. To learn more about the program or if you qualify, visit their website.

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Jen Moynihan

Jen Moynihan is a weekend anchor and reporter for KRDO. Learn more about Jen here.

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