Tax preparers warn unemployment recipients could owe IRS

The Hill ^ | 8/06/20 | Naomi Jagoda

[Libloather]

Tax preparers are concerned that many of the millions of Americans receiving unemployment benefits due to the pandemic are unaware that they might owe money to the IRS next year.

Jobless benefits are subject to federal income taxes, as well as state income taxes in most parts of the country.

But workers who are collecting benefits for the first time may not be aware of those tax implications, or they might opt against having taxes withheld from their benefit payments. People who do not have enough money withheld during the year could end up with smaller refunds or balances due to the IRS when they file their 2020 tax returns.

“It’s a bigger issue now because the volume of people who are unemployed is higher than usual,” said Cari Weston, director for tax practice and ethics at the American Institute of CPAs.

**SNIP**

Recipients of unemployment benefits have to pay federal income taxes on them, but not payroll taxes. Additionally, most states require people to pay state taxes on their unemployment benefits. Alabama, California, Montana, New Jersey, Pennsylvania and Virginia don’t tax the benefits, along with states that don’t tax any wage income.

[Libloather]

Freeloaders hardest hit.

[beef]

This is good. I think that everyone at one time or another should have to figure their withholding and send in their quarterlies. Either that, or find out what happens when you don’t.

[GrandJediMasterYoda]

They are going to get killed on tax day, especially those who were taking in $1000 a week. They had a base $400 unemployment plus $600 extra and that’s PER WEEK for 26 weeks or $26,000 total. In communist states like New York, Assachussets, Cali, they are going to be obliterated with a tax bill and jobs are going to be hard to find because everyone is rushing back to work unless they extend this ridiculous $600 a week. This summer was a nightmare for me and my company, we are involved in transporting farm goods. Last year we had 9 drivers, this year we could only hire two because nobody wanted to work

[FirstFlaBn]

Unemployment benefits were not taxed at the federal level until the mild 1992 recession when Dems and RINOs added it as a way to finance a benefits extension (i.e., vote buying in an election year).

[gattaca]

Rush mentioned this yesterday on his show.

[a fool in paradise]

People pulling unemployment making more than those who are working and they’re somehow victimized because they’ve got a pay taxes on their unemployment and $600 bonuses.

[a fool in paradise]

Good. They are the ones who pushed for confiscatory taxes

[Blood of Tyrants]

HAHAHAHA! That “free money” isn’t so free! And that fat UIC check is going to go to zero AND they’ll learn what it’s like to have to PAY taxes!

Just remember, ain’t nothing in this life free except the love of God.

[arthurus]

Recipients will all get 1019s. The problem comes with the usual suspects who spend every dime they get by noon Friday. They have problems anyway.

[Bernard]

Actually a way to encourage people to become Republicans. Just like teenagers who get their first paycheck and find out that taxes are withheld.

Actually, if tax withholding was stopped and people had to actually send a check to the governments for income tax, Medicare and Social Security by April 15 each year, we might see more Republicans and more Benito Mussolini -style retirement parties for career politicians. Too many people think they won the lottery when they get an income tax refund.

It'a your own money, folks!

[Laslo Fripp]

I took mine and purchased 300 shares of ACB. 🇺🇸🇺🇸🇺🇸

[lizma2]

“Freeloaders hardest hit.”

I am not a freeloader.

Unemployment is a fraction of what I made before. Spending hundreds of hour looking for a job. I live in the D.C. area and it’s still pretty much closed down.

I really want to go back to work big time.

[eyeamok]

Abolish the “Victory Tax” and end Mandatory Witholding, then watch how fast shit changes when Everybody gets to write that check like I do.

[babble-on]

I’ve been wondering about this.

[LostInBayport]

They are going to get killed on tax day, especially those who were taking in $1000 a week. They had a base $400 unemployment plus $600 extra and that’s PER WEEK for 26 weeks or $26,000 total.

And there is also a segment of the populace that, for whatever circumstance, works very little but counts on the windfall from the Earned Income Tax Credit once a year. I know of a few people like this. The $600 per week must have been like hitting the lottery.

I wonder if they will feel that way at tax time, when that EITC goes bye-bye and they may even have to pay in. Welcome to my world!

[griswold3]

Trumps payroll tax cut will take care of this

[norcal joe]

Trumps payroll tax cut will take care of this

I believe that the proposed payroll tax cut only applies to medicare and social security taxes, not income. (But I'm not a tax attorney - it's just what I read a few places when I looked it up.)

[a fool in paradise]

I lost my job in the Obama error and being white collar didn’t “52-weeks” of unemployment or a $600 bonus. My 401k got depleted while looking for a corporate job. Where’s my makeup checks?

[cyclotic]

I also lost mine then. Fortunately didn’t have to drain 401K but I did have to move the family 600 miles and live separate from them for the first 8 months till we could sell the house.

At one point, I called the mortgage company and asked what programs they had to help customers who were unemployed but hadn’t yet faced foreclosure.

I was told they had nothing for those who were scraping by and making their payments. I was told to skip a couple months payments and call them back.

Nothin doing.

[Mastador1]

Well Duh! You suddenly receive an extra $2400 a month along with your unemployment, a tidy sum on which you pay absolutely no taxes on and your supposed to be surprised that you will owe Uncle Sam for that largess?