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Unfortunately, these benefits are indeed taxable. Here now are some answers to your most urgent tax questions.
The tax deadline is typically April 15th. However, due to circumstances beyond our collective control, that deadline was extended this year. Even so, you may be curious about the outlook for 2021. With many workers being furloughed or even laid off, unemployment benefits are more important than ever before. However, most everyone is probably counting on the money coming through in full. Unfortunately, these benefits are indeed taxable. Here now are some answers to your most urgent tax questions.
Am I Eligible in the First Place?
You could be eligible for unemployment benefits; it’s not always a sure thing. If you lost your job through “no fault of your own” then the Department of Labor will be in touch through their Unemployment Insurance program. There’s a set formula according to individual state laws that also influences your overall eligibility. This matter becomes rather more complicated when you reside in one state but work in another – regardless of a remote position – where the state that your employer is based in will see their region’s laws take effect instead.
How Do I Collect My Benefits?
The question of actually collecting the benefits due to you can also be a confusing process. You’ve got to have the motivation and drive to start working again. Applying and getting for jobs (or several at a time, as the case may be) are necessary steps to take. Keep track of everything you do – not only does this help keep you organized, but it also presents proof that you are doing what you need to do in order to collect your benefits.
Are The Benefits Truly Taxable?
This is perhaps the most pressing of all of the tax questions on our humble list. These benefits count as taxable income, so the IRS will be monitoring how much you bring in and the taxed portion will be incurred; regardless of what you do with the money, it must be reported properly. Your tax circumstances will also affect whether or not you will owe taxes during the months or years you were unemployed.
What About Money from Supplemental Income?
This quandary is also one of the most important tax questions you will need to find the answers to; part-time work is gaining traction in the modern-day gig economy. So if you gain supplemental income from part-time employment or self-employment during this time, you can at least be entitled to partial unemployment benefits. You’ve got to report your gross earnings to the state authorities; if you don’t, then it could be construed as tax fraud.
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Unlike other accounting firms, The Harding Group, located in Annapolis, MD, will never charge you for emails or phone calls and will strive for open communication with our clients. Whether you are interested in business advising, tax preparation, bookkeeping and accounting, payroll services, Training + support for QuickBooks, or retirement planning, we have the expertise and years of experience to help. We serve clients in Annapolis, Anne Arundel County, Baltimore, Severna Park, and Columbia. If you are ready to take the stress out of taxes, contact us online or give us a call at (410) 573-9991 for a free consultation. For more tax tips, follow us on Facebook, Twitter, YouTube, and LinkedIn.