The United States was in a standstill where most counties, states and cities stopped functioning and that left many people out of work. Not being able to find a job and get the money that you need to pay your bills can be stressful. During the pandemic many companies offered extra time to pay bills and decided not to charge for late payments or turn off services. That is how many people were able to make it through the weeks and even months that they were out of work. The other benefit that was offered was unemployment. You can apply for unemployment when you are let go from your job. This will allow you the chance to make some money while you are out looking for work. You use a government website to file your claim and then each week you are required to file to ensure that you get your weekly amount. The problem is that many people do not know how that will impact their taxes at the end of the year. Mark Dicus & Company outlines what you need to know about paying taxes on your unemployment.
Do You Pay Taxes on Unemployment?
One of the questions you might be wondering about is if you are required to pay for taxes on benefits that you are given during unemployment. The answer is a simple one and that is yes. You do have to pay taxes since this is still considered income for the individual that applied for and accepted it. If you accept unemployment benefits and you do not apply them to your taxes at the end of the year you will be subject to penalties and fines. It is best to talk with a tax expert about filing your taxes after getting unemployment.
Unemployment Tax Withholding
One of the things that you want to make sure you avoid is getting into a position that you owe more on taxes then you can pay. One of the questions that people have is if there is a way to have the taxes withheld from your payments. The answer is that you can fill out a form with the IRS and this will make it so that they hold the funds due for taxes so you do not have to worry about it. You also can do what you can to save the money that you think you will have to pay for taxes at the end of the year if you are responsible.
1099-G Forms & Instructions
When you are waiting for all your documents at the end of the year that are needed to file your taxes you need to know what you will be getting. Most people are waiting for their W-2 from their employer. If you were one of the people that got unemployment during the year you need to wait for a 1099-G which will be sent to you to show what your unemployment income was.