Refunds will continue into the summer months.
Typically, unemployment benefits are taxed as ordinary income.
If youre married, each spouse can exclude the first $10,200 of unemployment benefits.
This post refers to the 2020 tax season. For the most up-to-date info, check out ourrecent tax articles.
But the IRS says that wont be necessary.
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What if I Havent Filed Yet?
Theyll ask you a few questions to determine whether you qualify for the unemployment tax break.
The IRS hasinstructions on its websitefor those filing a paper return.
But wed strongly recommend filing online.
The IRS has a huge backlog of unprocessed paper returns from 2019.
Filing by paper could add months to the time it takes to process your return.
Youll minimize your penalties by filing an on-time return, even if you cant pay anything.
One thing to keep in mind is that the tax break on unemployment is for 2020 only.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder.
She writes the Dear Penny personal finance advice column.
Send your tricky money questions to[email protected].
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