While theagreed to a weekly payment of $ 400 that ended in August, the Senate proposed several changes on Friday. Under the new Senate Plan, But it would also add up to $ 10,200 in last year’s unemployment benefits, tax-exempt – which could benefit your family. (Find out , also in
This is also stuck in you, and things can get confusing, especially if you’ve already applied this year. But here’s what we know so far about what the latest incentive bill proposal means for those who are unemployed, and how the numbers might work for you.
What unemployment benefits are there currently?
In December, Congress passed weeklyas part of , which is also eligible people one up to $ 600. (If you never received your first or second check, you can still do so
The $ 300 unemployment checks expire this month. If the new bill goes into law on March 14, it would extend federal unemployment assistance without a hole in funding.
How much unemployment money could I get from the latest incentive law?
We won’t know exactly what benefits are included in the bill until Congress has agreed on a final version and President Joe Biden signs it into law, which all parties want to do by mid-March. But the Senate’s latest proposal, unveiled Friday, includesThis stems from the House’s proposal of $ 400 a week. However, it includes a new tax break (more below).
Will my unemployment benefits be taxed during the pandemic?
By law, unemployment benefits are taxable and must be listed on your federal tax return, according to the IRS. This includes the special unemployment benefits allowed under the COVID-19 amortization accounts. These tax bills can range from a few hundred to several thousand dollars – a major burden for those out of work, many of whom were unaware that benefits would be taxed, The Washington Post reported.
But the Senate proposal would exempt up to $ 10,200 in unemployment benefits from last year. This has a number of implications. First, it is retroactive: you could get the tax break for every unemployment collected in 2020, but not 2021. Second, the tax season has already started and millions of people have already filed returns. If you’ve collected unemployment and have already filed your taxes, you would have to file something like an amended tax return once the bill is passed to take advantage of this tax change.
According to the White House, the addition of the tax break will provide more relief to the unemployed than current legislation. However, according to tax experts, it really depends on your specific situation (more on that below).
Does this mean that I will receive more or less money?
It depends. The tax benefit would only apply to benefits received in 2020, while the reduced weekly benefits of $ 300 will apply for 2021. Some people would get a tax cut under this plan because they got unemployment in 2020, but no more, so this deal would be a net profit for them, according to Janet Holtzblatt, a senior fellow at the Urban-Brookings Tax Policy Center.
The same is also true the other way around, Holtzblatt said: People who were not unemployed in 2020, but who are currently unemployed, would receive smaller benefits under this current plan, but no benefit from the tax break.
Here’s a calculation showing how this could end up making you more money, according to Andrew Stettner, a senior fellow at the progressive think tank The Century Foundation:
Others remain skeptical. “Allowing a deduction or exclusion for UI benefits for tax purposes would not help the lowest-income workers and it would not be as progressive if people simply gave more UI benefits,” said Steve Wamhoff, director of the federal government. tax policy at the Institute on Taxation and Economic Policy. “Lowest-income workers pay federal payroll taxes, but they earn too little to pay personal income tax. So giving them a deduction for their personal income tax doesn’t help them at all.”
The people who would benefit most from the changes are those with a good income who are only unemployed for part of the year, or someone who is unemployed but has a spouse who earns a decent salary, ‘because a tax deduction does the most for people in the highest personal income tax brackets, ”said Wamhoff.
How do I submit an amended tax return?
If this version of the bill becomes law and you want to file a new unemployment tax break, you must complete IRS Form 1040-X, Amended U.S. Individual Income Tax Return. You can do this electronically with tax filing software to amend your 2020 Forms 1040 or 1040-SR, assuming you have submitted it online. Or you can submit it by mail.
You must enclose copies of any forms that you change from your original declaration. The IRS would likely issue a new form to claim this benefit.
If you haven’t filed your 2020 taxes by the time the bill expires, you can claim the new unemployment tax benefit on your regular return. (Here’s more on thatespecially if needed – even We also have information about it , and
When would I get my unemployment tax benefit?
The IRS website states that you have up to 16 weeks to process your amended tax return.
For more information, read what we know so far, and