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Need some clarity on tax ramifications
bpost
Member Posts: 32,669 ✭✭✭✭
I was laid off for 4 weeks in late April for four weeks. My Company got the PPL and called me back to work. I got four weeks of the $600 federal boost in unemployment and I got the $600 give-away on 01-31-2020. Is any of it taxable to the feds as income?
Comments
Not sure if it is a state thing or not but when I was collecting unemployment in Texas around 2010, my "income" from it was taxable to the feds if I remember correctly. Supposedly as previously posted in other threads the "stimulus" check is not counted as income...
Although tax rules vary by state, Uncle Sam taxes unemployment benefits as if they were wages. None of the stimulus money is taxable as it is not income; it is an advance of a refundable tax credit.
"advance of a refundable tax credit"
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That is true except in the case where your circumstances changed from 2019 to 2020. The advance was based on how you filed in 2019 tax return. If your filing status or dependents change from 2019 to 2020 you may not be due the full credit for what you received and you may have to pay back some if the advance.
The stimulus one time payment is NOT taxable by the Federal Govt. States however can tax it as income.
All UI IS taxable including and especially the $600 federal UI boost by the Federal Gov.
States vary.
Mark Christian, you are spot on. Unemployment is taxable on federal returns and depending on the state, it may be taxable on the state return.
The stimulus payments were an advance on a new credit on the 2020 returns. The credit will be based on the income and dependents on the 2020 return and if one is due more credit (filing status change, income less in 2020 than 2018/2019 which caused a reduction in the advance or an additional dependent in 2020) than they received on the advance (or never received), they will get an additional credit.
If someone received more of an advance than they would be eligible for based on 2020 income and dependents (fewer dependents, higher income that reduces the advance or losing a dependent), they will not have to pay it back.
Going to be a fun tax season. 🤪
Well, that is nice to hear...as opposed to:
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Trust me, that comment will be dealt with later! 😯
In the meantime, I hope that you post more often. Best, Mark C.
Well the more I read about the stimulus, the more I am unsure about it. I understand that there is a earnings maximum to be eligible, it isn't taxed, and that it's based on your 2019 returns. Can someone answer this for me? What if someone made well over the maximum earnings in 2019 but well under the maximum in 2020. Naturally, she didn't receive any stimulus money in 2020. Is this gone for good or is there any recourse showing in her 2020 return that she indeed made well under the maximum in 2020 and would be eligible for both checks?
Thanks guys,
cbxjeff, under the scenario you mentioned, that person will be getting the stimulus credit on the 2020 return because the IRS was simply advancing the credit based on either the 2018 tax return info (if someone had filed an extension on their 2019 return and had not filed their 2019 return yet at the time of advance) or their 2019 tax return info.
Thanks folks. I'll try to keep her out of jail.