Although tax professionals and do-it-yourself preparation software can help walk people through their federal returns, the 2021 tax season nonetheless has folks perplexed. Are stimulus payments taxable income? Can my child attending college claim a stimulus-relief credit? Can workers take a home-office deduction now that they are commuting no farther than the kitchen table? You should want to know the answers.
Eric Bronnenkant, head of tax at Betterment, an online financial management company, and Curtis Campbell, the president of TaxAct, one of the leading online tax preparation services, joined me this tax season for online tax chats. Here are the answers to some questions that kept popping up during the discussions. Some questions and answers may have been edited for clarity.
What to know
- For health reasons, I will not be able to file by May 17. Will the usual six month extension be available on request?
- I owe the IRS on my federal return, based on my return I submitted back in February 2021. I received unemployment in 2020. Now my accountant said not to pay what I owe, or amend the return, as the IRS is adjusting all returns that have been processed prior to the change. I have not received a letter from them. I do not want an issue with a late payment. What do I do?
- Can parents pay children to do chores and can the kids contribute that money to a Roth IRA without filing a tax return?
- I am confused about whether stimulus payments count as income. Will we get a form to report these payments on our tax returns?
- The first criterion in the worksheet for claiming the Recovery Rebate Credit relates to dependent status. Can I choose not to claim my daughter, who is in college, so she can claim the credit and get a stimulus payment?
- What is the maximum a dependent child can earn to be claimed as a dependent?