Sioux City, Iowa (KTIV) -- The new year is upon us, and after 2020, we're shining the spotlight on being financially healthy in 2021 and properly doing our taxes, which includes stimulus checks this time around.
Jeana Goosmann, Managing Partner and CEO of Goosmann Law Firm is helping us navigate these waters.
Question: This year, American’s received $1,200 stimulus checks and some people will be getting another $600 before the end of the year. Will Americans have to claim that money as income? How should they account for this payment on their taxes?
Jeana Goosmann: This is on the minds of many Americans and the good news is, the IRS has determined these payments are not taxable so these payments will not reduce your refund or increase your tax liability.
Question: Explain the PPP loans that many people were able to take advantage of this year. Do they need to pay taxes on those funds too?
Jeana Goosmann: The PPP were the paycheck protection loans that were forgivable loans that were given to small businesses across America. And those loans that have been forgiven, the IRS first thought that they would not allow those deductions to be made, but Congress and the President just signed into law, last Sunday night, the new law that says that those payments that businesses received in those forgivable loan dollars will not be taxed and they will be allowed to take those business deductions for the expenses that they paid under those funds.
Question: What are some of your suggestions for making sure we are filing our taxes properly, but not overpaying? Will this tax year be busier because of all of the COVID Relief?
Jeana Goosmann: It's very important to consult with a tax professional when you file your tax returns to make sure that you know the law and that you're filing it accordingly. No one wants to overpay their taxes, and certainly, in a year where we had more legislative changes and different financial circumstances than any that I can recall in history, I think that it's really important to talk with your tax professionals at this point in time. One thing I do want to point out is that anyone who did receive unemployment benefits, those are considered taxable income and you will need to pay tax on those.
Knowing that the PPP dollars are no longer taxed and you can make those deductions is the biggest change that's happened in the last week.