Accounting firms are presently in one of the busiest parts of the year, and many people have questions about how their stimulus checks will impact their taxes. Some people have already received all three stimulus payments, while others have yet to receive anything. These different timeframes for receiving stimulus payments often creates even more confusion on how it will impact their taxes.
Expect Calls and Use Them to Expand Services Offered
Accounting firms should expect to receive a large number of phone calls related to stimulus checks and taxes. Educating each client is essential in eliminating any confusion related to these payments while also providing you a great way to build rapport with each person. These phone calls give you a perfect opportunity to discuss your accounting services and how your business can help them manage all of their taxes.
Highlighting the benefits of using your tax pro software is an excellent way to create a valuable partnership with businesses. Offering tax and accountant services for business development is a great way to keep costs to a minimum while also saving each customer time and effort. Phone calls related to stimulus payments and taxes will only continue to increase, as it provides a perfect opportunity to offer additional accounting services.
Question to Expect: Will I Get a Stimulus Check If I Owe Taxes?
Many people are concerned about not receiving their stimulus check if they owe the government taxes. For example, the IRS will automatically use a tax refund to pay off any outstanding taxes, student loans, or child support payments. However, most taxpayers will not have to worry about the government withholding stimulus money due to taxes.
These stimulus checks are designed to give the economy a boost while also helping to cover basic needs. Eligible recipients will receive a check from the IRS even if they owe taxes. However, this may not be the case if the stimulus was not sent directly to the taxpayer, and has to be claimed on the income tax return as a tax credit and it’s always a good idea to pay off tax debts as soon as possible to avoid significant legal problems and additional fines.
Question to Expect– Are Stimulus Checks Taxable?
Receiving a stimulus payment is one of the few times you can gain money without having to report it as income on your tax return. This additional source of income is perfect for paying off debts or helping to pay for necessities. In many cases, the IRS uses tax returns from 2018 to determine eligibility for these benefits or use 2019 tax returns if taxes are already filed.
Not Your Typical Tax Credit
These stimulus payments are technically a tax credit, but even better, it is a refundable tax credit.
For example, if you owe $1,500 in taxes but had a refundable credit of $1,800, you would get a $300 tax refund from the government.
How to Recover Missed Stimulus Payments
You can also receive your stimulus check from 2020 on your tax return if you could not get the first or second stimulus payments you were eligible to receive last year. Many taxpayers who used a bank product to receive their tax refund experienced this problem. You will also not have to worry about paying the stimulus back if your income in 2020 was much higher compared to your 2018 or 2019 tax return.
Closing Thoughts
Keeping up with all of the various rules impacting taxes and stimulus checks isn’t an easy task for most people unless you are a tax accountant. Misconceptions about taxes are an all too common occurrence, as accounting firms will continue to play a critical role in educating clients about how their stimulus checks will impact their taxes. Keeping all of these questions in mind is important for accounting services to meet each client’s needs best.