 TITLE: How Will COVID-19 Affect Your Taxes? CONTENT: What if COVID-19 Changed Your Job Status or Income?\n---------------------------------------------------\nCOVID-19 has changed people's work lives in many ways. Some of these changes may affect your taxes.\n*   **Your unemployment benefits are taxable.** If you collected unemployment benefits, including the supplemental $600 per week provided by the federal government for part of the year, you must pay federal taxes on your unemployment benefits. You should receive Form 1099-G, Certain Government Payments, which shows the amount of unemployment compensation paid to you in Box 1 and any federal income tax withheld in Box 4. If you did not request taxes to be withheld or pay estimated taxes on your unemployment benefits in 2020, you will owe them at tax time. You may or may not owe state and local taxes depending on tax laws where you live.\n*   **Was your income reduced in 2020?** You may be eligible for the Earned Income Tax Credit (EITC). The IRS can help you calculate your eligibility using either your 2019 or 2020 income, whichever is more favorable for you. Also, if you had at least $2,500 in earned income and have qualifying children ages 17 and under, you may also be eligible for an Additional Child Tax Credit (ACTC). This year, taxpayers who are eligible for ACTC may receive any portion of the $2,000 Child Tax Credit that is left over after paying taxes as a refund. Normally, if the Child Tax Credit exceeds your tax bill, the remaining credit simply goes away.\n*   **Your home office expenses are not deductible.** If you've been doing your full-time job from home, you cannot deduct these or other business-related expenses, such as office supplies. However, if you've developed a side business to supplement your income, your home office and business-related expenses _are_ deductible.\n*   **The side income you made is taxable.** Did you do odd jobs, freelance or start a homebased business this year? The income you made is taxable, and you may be required to file Form 1040 Schedule C, Profit or Loss from a Business. END