More Than 50 Percent of U.S. Taxpayers Are Concerned About Pandemic-Related Tax Debt
As taxpayers look ahead to 2021, 53 percent of 1,000 U.S. taxpayers in a LendEDU survey conducted Dec. 1 said that they were worried about their tax debt when filing their 2020 taxes due to the pandemic and its economic impact.
When considering only those respondents who had been laid off, the results were even more sobering with 76 percent saying that they were either worried or very worried over their pandemic-related tax debt. Only 20 percent said they were not concerned.
The results are a telling sign that the pandemic and its economic impact are still hurting American taxpayers, and it could have long-term implications. According to the LendEDU report, tax extensions may have temporarily stopped the bleeding, yet there’s a looming tax debt crisis that has the potential to boil over in 2021 when 2020 taxes are due.
Indeed, even despite the IRS extending the 2019 tax filing deadline until July 15, 2020, some taxpayers still have not paid their 2019 taxes. In the survey, 10 percent said they had not paid, and 72 percent of those respondents had not filed their tax returns at all.
And when factoring in the millions of Americans who took to relying on unemployment benefits, retirement funds or stock sales to stay afloat amidst the pandemic recession, the report notes that it could lead to a heavier tax obligation in 2021. In the survey, 19 percent said they borrowed money from a retirement account to cover expenses, and of those respondents, nearly 80 percent said they were concerned they may owe more taxes next year due to that borrowing.
Similarly, 18 percent of respondents sold stocks or liquidated other investments due to the pandemic recession, including 30 percent of those who had lost their jobs.
Read the full survey results here.