Have the right tax withheld for 2020
Unemployment benefits are taxable
Unemployment benefits must be reported on your federal tax return. A record number of Americans are applying for unemployment compensation due to the COVID-19 Outbreak. If you received unemployment benefits, as well as the additional $600 per week in coronavirus relief any time during the year, your tax return may be affected.
- Do I have to report unemployment benefits on my federal income tax return?
Yes, any unemployment compensation received during the year must be reported on your federal tax return.
- How will I know how much unemployment compensation I received?
If you received unemployment compensation during the year, you should receive Form 1099-G from your state’s unemployment office.
- How will unemployment compensation affect my tax return?
If you do not have taxes withheld from your unemployment compensation, it could result in a tax liability.
- Can I have federal income tax withheld from my unemployment compensation?
Yes, you can choose to have federal income tax withheld from your unemployment benefits by submitting a Form W-4V, Voluntary Withholding Request, to your state’s unemployment office.
- If I am no longer collecting unemployment benefits, how can I pay the tax due?
You can make estimated tax payments at www.irs.gov/Form 1040-ES and/or increase your withholding once you have a new job. You can check your estimated withholding using the calculator at www.irs.gov/W4app. See www.irs.gov/payments for more payment options.
According to The Bureau of Labor Statistics, over 23 million U.S. workers have filed for unemployment this year nationwide.
For the first time, some self-employed workers qualified for unemployment benefits.
For more information, contact your state’s unemployment office and visit: www.irs.gov/UC