As the impact of coronavirus continues to ravage the country, the number of people filing for unemployment is off the charts. In fact, the pandemic has put approximately 35 million Americans out of work.
How COVID-19 has Affected Unemployment Benefits
To provide relief for Americans impacted by coronavirus, the new Coronavirus Aid, Relief, and Economic Security Act (CARES) was passed, making unemployment benefits more accessible to Americans struggling financially due to the pandemic.
The CARES Act includes a $600 per week unemployment increase until July 31st, 2020. The CARES Act waived the standard one-week waiting period requirement for those who are eligible to receive unemployment benefits, which means you can apply the same day you lose your job. States will distribute the federal unemployment benefit. If you’re self-employed, you may qualify for Pandemic Unemployment Assistance (PUA). This federally funded program pays the same weekly benefits as a state’s regular unemployment program.
Who is Eligible for Unemployment?
State laws determine who qualifies for unemployment. In most cases, you must meet the following requirements:
- You have been connected to the workforce for long enough to meet monetary eligibility rules.
- You are able and available for suitable employment.
- You were laid off through no fault of your own.
Specific to COVID-19, if any of these situations describe your circumstances, you may be eligible.
- Your employer temporarily ceases operations due to COVID-19
- You’re quarantined with the expectation of returning to work after the quarantine is over
- You have to leave employment to care for a family member.
- You quit your job as a direct result of COVID-19.
Is the $600 CARES Act Federal Unemployment Taxable?
To help Americans impacted by coronavirus,The $600 CARES Act Federal Unemployment income is taxable and should be included in your income for the year. When it’s time to file taxes, you’ll receive Form 1099-G, which will show the amount of unemployment income you received. Form 1099-G will also show any federal taxes you had taken out of your unemployment pay.
How Do You Pay Taxes on Unemployment?
If you’ve been laid off or furloughed due to the COVID-19 pandemic, you may be wondering how to pay taxes on unemployment and what the tax implications are. Here are some tips if you’re receiving unemployment income.
Have Taxes Automatically Withheld
You can have your taxes automatically withheld from your state and federal unemployment benefits. The most straightforward way to choose income tax withholding is during the application process by filling out Form W-4V. You can expect your state to keep up to 10% of your benefit amount. Instead of receiving the entire $600 weekly benefit, you’ll receive $540.
If You Don’t Withhold Upfront, File Estimated Payments
If you don’t withhold upfront, you’ll need to send estimated tax payments after each quarter.
File Before July 15th, 2020.
As the coronavirus and uncertainty continues to spread, the IRS made the decision to help taxpayers by extending the 2019 tax filing deadline to July 15th.
Is My Stimulus Payment Taxable?
Although the $600 weekly unemployment income is taxable, the $1,200 stimulus payment isn’t. It’s considered an advance on a refundable tax credit.
To help Americans impacted by coronavirus,Why US Tax Shield is the Best Tax Resource for the Unemployed
Our team at US Tax Shield is composed of tax professionals with over 20 years of experience helping thousands of clients – individuals, sole proprietors, partnerships, and corporations – solve their toughest IRS and state tax problems. We are a full-service tax resolution firm that can resolve almost any IRS or state tax issue.
Dealing with the IRS or State taxing authorities isn’t easy to do alone, especially during these unprecedented times. Luckily, our tax professionals can help you navigate your options. Contact US Tax Shield today at (877) 829-3535 for your free, no-obligation consultation.
