San Francisco Tax Preparation / CPA: IRS Reminds Individuals: Unemployment Compensation Taxable

Filed in CCH NEWS FEED by on September 9, 2020

The IRS has reminded individuals receiving unemployment compensation (beneficiaries) that they can have tax withheld from their benefits now to help avoid owing taxes on this income when they file their federal income tax return next year.

Quarterly Estimated Tax Payments

If a beneficiary does not choose withholding, or if withholding is not enough, the beneficiary can make quarterly estimated tax payments instead. The payment for the first two quarters of 2020 was due on July 15. Third and fourth quarter payments are due on September 15, 2020, and January 15, 2021, respectively.

Types of Payments

Types of payments for which the IRS urges taxpayers to check their withholding include:

  • Unemployment compensation, which includes benefits paid by a state or the District of Columbia from the Federal Unemployment Trust Fund;
  • Railroad unemployment compensation benefits;
  • Disability benefits paid as a substitute for unemployment compensation;
  • Trade readjustment allowances under the Trade Act of 1974;
  • Unemployment assistance under the Disaster Relief and Emergency Assistance Act of 1974; and
  • Unemployment assistance under the Airline Deregulation Act of 1978 Program.

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