Have questions about filing taxes this year? Start with our guide.

Between stimulus funds, unemployment payments, state-distributed assistance and plain old traditional deductions, filing taxes this year could get complicated.

“There’s been so many balls up in the air lately that it’s hard to keep up with what’s going on,” said Cynthia Adrian, income tax specialist for the Idaho State Tax Commission.

There’s plenty of issues that can be confusing, so let’s run through some questions and answers that might help.

I know the Internal Revenue Service extended the filing deadline to July last year. Is the deadline extended again this year?

Yes, but not to July. The IRS extended the federal tax filing deadline to May 17.

What about Idaho’s tax deadline?

Shortly after the federal deadline was extended, the Idaho State Tax Commission extended the state tax filing deadline to May 17 as well.

Will my unemployment payments be taxable?

Well, that’s not a yes or no question.

As of Jan. 1, the governor signed a bill stating Idaho conforms with IRS tax law, but that doesn’t apply to changes that occur after Jan. 1. The American Rescue Plan Act, the stimulus bill passed by Congress in March, exempted unemployment payments of up to $10,200 from federal tax. However, since Idaho does not allow the option of withholding state tax from unemployment payments and has not passed any legislation conforming to the same federal exemption, unemployment payments will still be taxable at the state level.

“I’m expecting Idaho is going to address that, but it has to come from the Legislature probably,” Adrian said. “… There’s going to be a lot of legislators’ constituents that are going to be emailing, calling and saying, ‘Hey you guys, get your crap together and get this done.’” 

The Idaho Legislature recessed for two weeks following a COVID-19 outbreak among legislators and will return April 6.

I already filed before the federal unemployment exemption went into effect. Should I amend my return?

No, sit tight. The IRS has asked taxpayers to wait for additional guidance on an amended return, because the exemption went into effect after 45 million people had already filed their returns. Adrian said IRS officials are likely trying to avoid too much chaos, and there is still uncertainty about how amended returns will be handled.

“They’ve already got a backlog, probably, because they don’t have enough people and all this stuff is being thrown at them,” she said. “It just adds to the backlog of stuff they already have.”

I received pandemic assistance funds. Are they taxable?

Some are, some aren’t. According to the Tax Commission, the following income is taxable:

• Pandemic Unemployment Assistance (PUA) for self-employed workers, independent contractors, and gig workers
• Return-to-Work bonuses for those who were laid off or otherwise unable to work because of the pandemic and returned to work between April 20 and July 15, 2020
• Emergency rental assistance program funds

OK, so what’s not taxable?

According to the Tax Commission, the following income is not taxable:

• Federal economic stimulus payments
• Rebound Idaho grants (for small businesses and self-employed individuals)
• Paycheck Protection Program (PPP) loans
• Strong Families Strong Students grants
• Economic Disaster Loan (EIDL) advance funds

Should I just file an extension until this all gets sorted out?

You can! There’s nothing wrong with filing an extension to Oct. 15. Just know that if you owe any taxes, you’ll still need to estimate your tax liability and pay the amount due at the time you file the extension.

Any other things to know for this tax season?

Adrian said a special provision this year allows taxpayers to deduct up to $300 in donations to qualifying charities, even for those who don’t itemize their deductions. According to the IRS, the change was made in the first stimulus bill in 2020, the CARES Act.

“Under this new change, individual taxpayers can claim an ‘above-the-line’ deduction of up to $300 for cash donations made to charity during 2020. This means the deduction lowers both adjusted gross income and taxable income – translating into tax savings for those making donations to qualifying tax-exempt organizations,” the IRS stated in a news release.

I still have questions. What should I do?

There is a lot of guidance on the Idaho State Tax Commission’s website, but you can also email [email protected] with specific questions. That will route your question quickly and easily to the right person at the Commission, Adrian said. If you need to call, it may not be as fast, but that number is (208) 334-7660.