Get helpful tips from Davenport University accounting professor
You don’t have to be earning your finance degree to know the saying. There is nothing certain in life except death and taxes. And of course – it’s tax time again. This year, however, things are a little different. With COVID Stimulus checks and unemployment, you may have a few questions about how to file your taxes this year.
We asked Scott Gumieny, professor at Davenport University, to provide a few tips to help navigate this tax season. He should know a thing or two about taxes having served as the Volunteer Income Tax Assistance (VITA) program site coordinator for Davenport and the West Michigan VITA Collegiate Program for 6 years. He is a full-time accounting instructor at Davenport University and prior to that, he spent 3 years at a public accounting firm in West Michigan, primarily preparing taxes for individuals and businesses.
Q: How does unemployment impact your taxes?
A: Unemployment is reported and is taxable at the federal and state level similar to how normal wages are reported and taxed. The major difference is that it is not considered earned income for purposes of calculating the earned income tax credit which is a very substantial credit for certain filers. Due to the pandemic and increased unemployment wages, the IRS allows taxpayers to use their 2019 earned income on the 2020 tax return in order to get the best earned income tax credit.
Q: Does everyone need to report their stimulus check this year?
A: Yes, everyone needs to report both stimulus checks. The stimulus checks are NOT TAXABLE, but if one or both were not received then taxpayers can claim and receive it on their 2020 tax return. The IRS has just started mailing forms 1444 and 1444-B that provide details of each stimulus payment. Taxpayers can also look up on irs.gov “get my payment” link when and how they received each stimulus payment, but not the amounts.
Q: What are good resources for help with your taxes?
A: There are a lot of publications online, software, and businesses that are good resources. On our taxhelp.davenport.edu website for clients that exceed the income threshold to use our Volunteer Income Tax Assistance (VITA) program, there is a link to e-file your own taxes for free through the IRS website.
Q: When should I use Turbo Tax vs. seeing a consultant?
A: Depends on three areas:
- Your knowledge of taxes
- Sources and amount of income
- Where the income is earned
Sources and amount of income is a major factor. If you have substantial self-employment (business owner which can be as small as Shipt or Uber) or rental property income then it will be best to seek a consultant as there are complex and sometimes obscure tax laws that need to be followed. Having tax positions taken then tracked from one tax year to another is also important and done efficiently with a consultant. Turbo tax can be used for W2 wages and smaller amounts of self-employment income. Location is important as well especially if you have a local filing requirement or travel for work as there are multiple state or local returns required and oftentimes Turbo Tax charges much more for this.
Q: What free program is Davenport offering and who is eligible?
A: Volunteer Income Tax Assistance (VITA) is offered through Davenport at one of 8 sites throughout Kent and Ottawa counties. Families or individuals making less than $57,000 in 2020 are eligible. Visit taxhelp.davenport.edu for additional details.