TOLEDO, Ohio — Due to record-high employment stemming from coronavirus, many Americans have relied on government assistance to pay their bills; but that money could impact next year's taxes.
During the pandemic, many have lost their jobs and may have applied for unemployment or PPP loans for small business owners. While those loans will be forgiven, that money isn't just being given away.
"Right now, as it stands, having to pay tax on whatever is forgiven - even though it says it is not taxable - they have come about in a different way and said you cannot deduct the wages that you would've ordinarily deducted. So, in effect, you're getting to the same place; it's taxable," Thomas Baird with Toledo CPA said.
Baird said that we don't have to worry about paying taxes on the stimulus checks, but unemployment checks are a different story and those impacted may have a little "sticker shock" come next year.
"But, the unemployment... if they get $10,000 of unemployment and they are in the 15% tax bracket, their tax bill is going to be $15,000 higher than it would've been otherwise," Baird said.
Some people were unaware these funds would have to be paid back.
"A lot of people don't know that, you know, their receiving this money they're getting grants and everything... they don't know they had to put this stuff back," area resident Anthony Banks said. "You know, like I said, if they're thinking like $10,000 or $5,000, you know, he thinks a lot of money in one lump sum, but it's not. So no, I don't think they should give it back."
Baird said that if you happen to apply for a loan during the crisis, just be aware that there may be tax consequences. However, you don't have to pay the money back all at once.