Along with the thefor and monthly starting this summer, March’s includes an extension to the $300 bonus checks for unemployed workers that lasts until Sept. 6. The $1.9 trillion stimulus package also includes a for people who receive unemployment insurance benefits.
Many states have automatically renewed unemployment insurance benefits, but some recipients may have issues when they reach the benefit year ending date (PDF). States limit benefits to one year, and the money is typically cut off after that date. The 2021 American Rescue Plan extends that unemployment insurance, but states require recipients to either file a new claim or request an extension. Because it varies from state to state, those who have been unemployed for at least a year should get in contact with their state’s labor department.
Check out the IRS guidance for how to use the tax exemption for unemployment insurance when you file your taxes (the). The plan lets tax filers who received benefits exempt the first $10,200 of funds as long as their modified adjusted gross income is less than $150,000. Those who already filed will not have to file an amended tax return. The IRS says it will recalculate and send out tax refunds to those who qualify starting this month, after the exemption is applied. Here’s everything you need to know about how the new package will help people who are unemployed. In addition, here’s what to know about .
Biden’sextends until Sept. 6, with a $300 federal bonus on top of what your state pays. That’s down from the proposed $400 weekly bonus from an earlier version of the bill, and down from the additional $600 per week extended in last year’s .
The period between March 14 and Sept. 6 spans 25 weeks. Once payments pick up, that’s $7,500 in federal unemployment insurance that you could count on in addition to your state’s check amount.
How the $10,200 unemployment tax break will work
The IRS views unemployment insurance as income. In most cases, the state can withhold taxes like a typical paycheck. However, it’s estimated that 10 million unemployment benefit recipients had no taxes withheld, which means they would have a substantial tax bill to pay the following year. To counter that, the new COVID relief package includes afor those with an adjusted gross income under $150,000.
The way the exemption works is the first $10,200 of unemployment insurance will not be taxable. If someone received $20,000 of benefits in 2020, they will only be taxed on $9,800 of it.
The IRS gave instructions on how to enter the exemption on tax forms. People who already filed their taxes without the exemption will have their returns recalculated and refund checks will be sent out as early as May…Read more>>