AUGUSTA, Maine — A lot of questions come up during tax season, and through the pandemic, those stimulus payments have made filing a little more complicated. We're getting some viewer questions answered with tax expert, Eric Purvis, from Marcum LLP.
Martha asked, "Do we have to claim and pay taxes on the $285 2021 COVID disaster relief payment?"
Both Maine's FAQ website about the Disaster Relief Payment and Purvis agree on this one: yes and no. The Federal government could tax you on it, but Maine won't.
"If you've gotten one of those payments you should report it as other income on your federal return," said Purvis. "There will be a Schedule 1 [form] that you should report it on so it will be taxed on your federal return, but when you go to do your Maine return there's going to be a subtraction. There's a Maine subtraction worksheet that gets attached to your Maine return and you report that $285 as a COVID disaster payment subtraction."
Donna asked, "Do we have to include the stimulus checks we received last year as income on this year's tax return?"
The short answer is, "Yes, include it," but you won't lose money on it. It could be that you're owed more money if your circumstances changed at all last year.
"That amount is actually an advanced payment on a tax credit that shows up on your 2021 tax return. So that is not taxable income to a taxpayer," said Purvis. "If you received it, you don't have to report it. What people should understand is that if they are eligible for the credit on their 2021 return and they did not receive an advance payment then they can claim the credit on their 2021 tax return."
So don't skip that question because if you took home less in 2021, or had a baby, the government may be paying you more money.