Much has been publicized about the federal government increasing state unemployment payments by an extra $600 per week.
It is important to know that all unemployment benefits received are taxable income. This means that unemployment payments will be included as income on your 2020 tax returns. If you have not elected to have federal and state taxes withheld from the payments, you will likely have an unexpected tax bill come next April.
Our advice is to request that federal and state withholding be taken from your unemployment benefits to avoid being faced with a large lump sum due with your tax returns next year.
Honorine Campisi, CPA
