It’s the time of year to start thinking about taxes
— but the upcoming filing season is going to be
a bit trickier for many Americans due to rampant
unemployment, working from home and
general upheaval due to COVID-19.
Here are a few pandemic specific conditions —
good and bad — to be aware of.
UNEMPLOYMENT
Unemployment benefits are taxable income,
which tax experts say may surprise some filers.
Workers are not required to have federal taxes
withheld from their benefit payments. While
people have the option to have the tax withheld,
many do not.
It’s worth noting that unemployment benefits are
all subject to federal taxes but not all states tax it.
Taxpayers who unintentionally do not include
unemployment income on their taxes could face
a tax bill, penalties or interest charged by the
IRS, said Mark Steber, Jackson Hewitt’s chief tax
information officer.