Are you a worker who’s collecting unemployment benefits or an entrepreneur who had assistance through your state agency? Are you aware that these unemployment benefits are taxable and you may end up with a large tax bill in 2021 for this year’s return?

To avoid this there are a few things that you can do. You can talk to the agency who’s paying your benefits and ask them to voluntarily withhold an amount and pay that to your state and federal agencies. Or you can also file estimated tax payments. The next one is due September 15th, and the following one is due January 15th as well.

This payment can help you estimate what you are going to owe and pay it ahead of time to avoid any penalties or interest. Just make sure that you know ahead of time that these are taxable benefits and that you’re planning for the amount that’s due.

If you have any questions, you can reach out to us at abandp.com, that’s www.abandp.com. Phone number is (310) 534-5577 and our email is contact@abandp.com. I hope you found this helpful.

For more information on the federal taxability of your benefits, see the following IRS articles:

https://www.irs.gov/newsroom/irs-unemployment-compensation-is-taxable-have-tax-withheld-now-and-avoid-a-tax-time-surprise

https://www.irs.gov/newsroom/five-tax-tips-on-unemployment-benefits

Image Courtesy of winnond and freedigitalimages.net

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