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NEW - How to Get a BIG REFUND by Filing an AMENDED RETURN (New Tax Law Changes) - YouTube
Channel: Dr. Nitin Chhoda - Ignition Time
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Hello everyone and welcome to this episode聽
of Ignition Time. There's a lot of confusion聽聽
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about filing amended tax returns. What do you do聽
if you still haven't filed your taxes? What do you聽聽
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do if you file your taxes and are now expecting聽
a refund check from the federal government聽聽
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specifically from the IRS if you collected聽
unemployment benefits in 2020? We're now going to聽聽
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jump right into that. Here's a new article on your聽
screen from CNBC, this stimulus package changes聽聽
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tax rules mid-season. What to know about filing聽
an amended return. Now before I dig deeper into it聽聽
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I want our viewers and subscribers to know that聽
if you collected unemployment benefits in 2020,聽聽
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this applies to you. And more than 40 million of聽
our fellow Americans collected unemployment at聽聽
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some point or another in 2020 because they went on聽
unemployment and then they went off unemployment,聽聽
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that's the first factor. The second factor聽
is the first $10,200 in unemployment income,聽聽
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I use the word income because traditionally it's聽
taxes income but the first $10,200 in unemployment聽聽
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benefits are not subject to federal income聽
tax as long as and this is important as long聽聽
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as the adjusted gross income of the household was聽
under $150,000. Chances are you qualify because a聽聽
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majority of our fellow Americans fall under that聽
annual threshold. Also now this is very important,聽聽
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this refers to the total unemployment income,聽
so let's say you got state unemployment benefits聽聽
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of $8,000 and then you collected an additional聽
$4,000 through the $600 a week federal booster聽聽
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through the FPUC program that ended at the end of聽
July. They are looking at your combined income.聽聽
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So in this scenario it would be $8,000 plus let's聽
just say $4,200 so on the $12,200 in unemployment聽聽
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benefits, what the federal government considers聽
unemployment income, you would not be paying taxes聽聽
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on the first $10,200 as long as you're below the聽
annual income threshold in 2020 of $150,000. Now聽聽
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new information is emerging and I'll tell you聽
exactly what to do if you file your returns聽聽
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and exactly what to do if you have not filed聽
your returns yet. New information that was just聽聽
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released by the IRS and that was quoted in the聽
CNBC article is let's say you had both the husband聽聽
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and the wife on unemployment benefits. In this聽
scenario for married couples filing jointly who聽聽
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are both on unemployment benefits, the tax-free聽
amount is double the $10,200. So in this situation聽聽
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it would be $20,400 but again the combined聽
gross income must still be under $150,000. Now聽聽
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it's safe to say that if both the husband and the聽
wife were on unemployment benefits their combined聽聽
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annual income is going to be less than $150,000.聽
It's not like two people on unemployment make聽聽
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$150,000 a year. It's not like it's raining money聽
while you're on unemployment. Check that out,聽聽
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you guys like that? That's an effect I'm known for聽
by now. But jokes aside, there could be certain聽聽
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situations where let's say another member of聽
the family is earning unemployment and then聽聽
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they all file their taxes together which is why聽
the annual threshold of $150,000 applies. But聽聽
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again if both the husband and the wife are on聽
unemployment and the annual gross income of the聽聽
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entire family of the entire household is under 150聽
000 then in this case there would be a federal tax聽聽
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exemption on ten thousand two hundred dollars聽
times two which is twenty thousand four hundred聽聽
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dollars which will save several thousand dollars聽
for the average family now the only problem with聽聽
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this is it adds more complexity to what is already聽
a complex tax filing season remember the irs is聽聽
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completely overloaded they have to deal with the聽
earned income tax credit the child tax credit聽聽
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they also have to deal with all the returns that聽
are coming in and now mid-season through the tax聽聽
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filing season they are now experiencing a new聽
change in the tax law because this was passed聽聽
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by the house and by the senate so what the聽
irs is going to have to be faced with now is聽聽
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dealing with individuals who file their return and聽
who are now expecting a refund and also issuing聽聽
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guidelines for individuals who have not yet filed聽
a return and who qualify for the ten thousand聽聽
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two hundred dollar federal tax exemption waiver聽
because they were on unemployment benefits in fact聽聽
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the irs has already completely overloaded the irs聽
this year began accepting 2020 returns starting in聽聽
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february they normally do so in january because聽
they had to send out the stimulus checks the聽聽
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second stimulus checks in the month of january so聽
they were like oops i'm completely overloaded give聽聽
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me some more time and now they're probably going聽
to need even more time they now have to send out聽聽
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the 1400 stimulus checks to almost 85 percent聽
of american households we're talking electronic聽聽
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deposits we're talking checks in the mail so it's聽
safe to say that the irs is completely overloaded聽聽
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now through the 26th of february the irs has聽
already received more than 45 million returns and聽聽
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it has processed around 39 million of them which聽
is encouraging so some people who already filed聽聽
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their their tax returns who received unemployment聽
benefits if you're expecting a refund because of聽聽
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this new tax law you need to think again your tax聽
return needs to be updated to essentially tell the聽聽
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irs hey the first ten thousand two hundred dollars聽
are not taxed so you will need to amend and refile聽聽
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your tax returns it's not like the irs will say oh聽
we issued you a smaller refund check let's issue聽聽
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you a bigger refund check unfortunately it doesn't聽
work like that so once the bill becomes law the聽聽
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submitted returns will be incorrect and therefore聽
will need to be updated and resubmitted so this聽聽
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is where there's a little bit of complexity if聽
you've already filed your tax returns before the聽聽
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bill became law and this poses new challenges聽
for individuals who file their returns early聽聽
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in an effort to be organized and in an effort聽
to get a refund but now they find that they have聽聽
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to refile their returns in order to get a larger聽
refund this is a weird situation in which waiting聽聽
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longer and waiting for irs guidelines could put聽
you in a situation where you get a larger refund聽聽
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check from the federal government from the irs so聽
what's the bottom line if you have not filed your聽聽
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tax returns yet you may want to wait wait for the聽
irs to issue guidance and at that point you can聽聽
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file your tax returns and get a larger refund聽
check if it's if you're eligible for it but on聽聽
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the other hand what do you do if you've already聽
submitted your tax returns do you immediately聽聽
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submit an amended return there may be there may聽
be a ray of hope there is a possibility that the聽聽
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irs by itself may send you the the overpayment聽
because if you paid federal income taxes on your聽聽
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unemployment benefits and you are not supposed聽
to pay there is a possibility that the irs might聽聽
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just send it to you without you having to聽
file an amended return but we have to wait聽聽
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for additional guidelines i did mention at the聽
start of the video that the irs won't do that聽聽
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but but you never know with the irs they might聽
actually do that if they get pressure from the聽聽
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white house and from the u.s treasury secretary聽
here's a quote from the cnbc article that we聽聽
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referenced earlier in this video if you already聽
filed your 2020 return but had unemployment income聽聽
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and would have benefited from the new changes聽
meaning if you were eligible for a waiver of of聽聽
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your federal taxes federal tax exemption for聽
the first ten thousand two hundred dollars聽聽
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in unemployment benefits there's a chance the聽
irs will take care of updating your information聽聽
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and sending you any money owed or for that聽
matter any overpayment that you may have made聽聽
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in federal income taxes if that happens it would聽
mean that those people do not have to take any聽聽
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action to update their tax returns the bottom line聽
is let's wait for further guidance but there is a聽聽
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flip side to this i don't know if we can depend on聽
the irs to essentially update millions of records聽聽
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and then proactively send out send out聽
overpayments of the federal income taxes聽聽
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i don't think i don't think the refund checks聽
can be mailed out simply because the irs is聽聽
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completely overloaded it's more likely that the聽
irs will need you to file an amended tax return聽聽
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so that they get the updated information they聽
get the updated tax returns and then they say聽聽
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okay you're eligible for a refund based聽
on the fact that you already paid and then聽聽
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they send it over to you that is more likely but聽
again at the time i'm recording this video we do聽聽
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not have clear guidance it's best to wait for the聽
irs to issue official guidance about this so let's聽聽
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say you do need to file an amended return and聽
you decide to do that the good news is this can聽聽
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actually be done electronically i'm talking about聽
the form 1040x by the way on your screen you'll聽聽
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see the form 1040x the physical form 1040x and as聽
we scroll down this form all the instructions for聽聽
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completing the form are actually on this document聽
as always we'll provide you with a link to this聽聽
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document which is from the irs website as well聽
as all our references in the description section聽聽
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below so make sure you check that out the bottom聽
line is you may decide you can decide to fill out聽聽
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form 1040x electronically and submit it to the irs聽
so in 2020 the irs decided to make the 1040x form聽聽
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electronic and this form is available with the聽
irs again here's the form on your screen right聽聽
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now this is the physical version of the form but聽
you will be able to submit this electronically聽聽
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now if you filed your taxes through some sort聽
of an electronic tax preparation software you聽聽
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may need to check with your with your provider to聽
see how you can amend your tax returns and refile聽聽
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your tax returns electronically or you could just聽
fill out the form 1040x and then mail it in to the聽聽
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irs although electronic filing is likely to get聽
you your refund much faster according to susan聽聽
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allen who's a cpa the crux of the form shows聽
three columns original amount net change and聽聽
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corrected amount the bottom of the first page of聽
the form 1040x then calculates how much you now聽聽
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owe or how much the irs now owes you let's show聽
you the bottom of the first page of form 1040x聽聽
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what the cpa was referring to once again the crux聽
of the form shows three columns original amount聽聽
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net change and corrected amount the bottom of the聽
first page of form 1040x then calculates how much聽聽
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you now owe or how much the irs now owes you so聽
you'll need to do this calculation you'll need to聽聽
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transmit this information to the irs and then the聽
irs will be able to issue you your refund assuming聽聽
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you've overpaid and you've already filed your聽
tax returns and assuming you've paid your federal聽聽
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taxes on the unemployment benefits there are now聽
that are now exempt from income taxes as long as聽聽
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it's the first ten thousand two hundred dollars聽
now i can understand our viewers and subscribers聽聽
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wanting to file an amended tax return as quickly聽
as possible because you do want to get the refund聽聽
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but there's no there's no firm deadline for filing聽
an amended return and you can file more than one聽聽
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amended return if you need to generally you have聽
up to three years from the date you filed your聽聽
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original return to send in an amended return this聽
means that you can take a little bit of extra time聽聽
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to put your amended return together but if you聽
need the money you may want to do it sooner rather聽聽
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than later also remember that your unemployment聽
income may be subject to state income taxes you聽聽
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will have to check with your state i have done聽
another video on our channel talking about states聽聽
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that are not not charging taxes on unemployment聽
income it's really state specific thank you so聽聽
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much for watching i hope you learned something聽
new something new about amended tax returns for聽聽
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those who have been on unemployment benefits聽
and 40 million of our fellow americans were聽聽
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on unemployment benefits at one point or another聽
in 2020. thank you so much for watching i really聽聽
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appreciate you please click the like button聽
please subscribe please enable notifications聽聽
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that helps out the youtube algorithm that helps聽
out our channel thank you so much i hope this聽聽
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was helpful please also share this video with聽
a friend or family member so that we can spread聽聽
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this knowledge and we can help other individuals聽
who are confused about what they should do as far聽聽
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as their tax returns are concerned if they want聽
unemployment benefits in the year 2020. thank聽聽
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you so much i'm looking forward to seeing you in聽
the next episode of ignition time take care bye聽聽
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you
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