Tax Tip Tuesday: Filing All Sources of Income in 2021
Some people think that they don’t need to report certain types of income on their tax returns if they already had taxes taken out, especially withdrawals from retirement accounts and Unemployment Compensation or Pandemic Unemployment Assistance.
The IRS expects you to include all the income on your 2021 return if you got a form 1099 for it. This includes retirement account withdrawals, unemployment, cancellation of debt, and interest, including interest from the IRS for late refunds they paid you.
If you got a form 1099 saying that you were paid more unemployment than you actually received in 2021, check out our resource here.
If you were paid in cash or by personal check for your work in 2021, you need to include that income on your 2021 return even if you didn’t get a 1099 or a W-2. If you did get a form 1099 for your work, instead of a W-2, and you think that you were an employee, check out our webpage on worker misclassification.
By reporting this income on your tax return you can avoid problems in the future, including interest and penalties. You can’t get a refund of withheld tax if you don’t include that income on your tax return.
If you already filed your tax return and realize now that you didn’t include all your income, you can still file an amended return by contacting your tax preparer with that missing income information. If you file your amended return by April 18th, the IRS will treat it as if you included all of your income on your original return.
If you have any questions about any income you received in 2021, feel free to contact us to see if we can help you figure it out!