Filing taxes in the US often isn’t straightforward, and this year could be a bit more complicated. Between stimulus checks, the $600 boost to jobless benefits, and existing benefits like maternity and disability leave, it might not be clear which of these you’ll need to report when it comes time to file your 2020 taxes.
If you received additional or replacement income from any of these sources, here are some details that might help you when it comes time to file.
Received a stimulus check?
If you received a stimulus check, you might be wondering if it’s considered taxable income. There are also many people who are still waiting for their checks to arrive. Read on for more details.
Is it taxable?
The short answer is no. If you received a stimulus check, you will not need to report it as income when you file your taxes. That means that money received from a stimulus check will not be counted towards your gross income and will not affect how big or small your refund will be, or how much you might owe.
Didn’t get a stimulus check?
First, you can check to see the status of your check via the Get My Payment form on the IRS’s website.
But if you didn’t receive a check, or if you received less than the full amount, you may be eligible to receive a Recovery Rebate Credit on your tax return. If you file electronically through the IRS’s website, their software should help you figure out if you’re eligible.
You can see more details about how stimulus checks affect your filing on CNBC’s website.
Federal unemployment benefits (including those part of the CARES Act) are considered taxable income. That means the $600 boost to your jobless benefits will need to be reported on your federal tax return. Most states will also tax that income, but some won’t. Alabama, California, Montana, New Jersey, Virginia, and Pennsylvania do not count jobless benefits as taxable income, so you won’t report your jobless benefits to the state if you live there. Additionally, eight other states (Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming) don’t have state income tax at all, so you won’t report your jobless benefits on those state taxes either.
If you’re currently receiving unemployment benefits and want to avoid having a large tax bill next year, consider applying to have 10% of your benefits automatically withheld for tax purposes via Form W-4V on the IRS’s website.
Disability and family leave benefits are run by state governments, which means they have their own ways of handling these benefits. That also makes figuring out whether or not these benefits are taxable less straightforward, so it’s best to look up the rules in your state.