The $1,200 federal stimulus checks many Americans are getting are not subject to income tax, but unemployment benefits are.
Depending on where the recipient lives, he could be subject to both federal and state income taxes.
鈥淵ou鈥檙e going to pay federal income tax, but you escape Social Security tax and Medicare tax. When it comes to state taxes in our area, Maryland and D.C. do impose income taxes on unemployment benefits, but Virginia gives you a pass,鈥� D.C. tax attorney Raymond Quianzon told 草莓传媒.
A lot of people getting unemployment benefits right now are setting themselves up for a rude awakening come next spring.
The maximum unemployment benefit in the District is $425 a week; in Maryland, $430 a week, and in Virginia, $378 a week. Add the additional $600 a week available through July, and that could be a big tax bill.
鈥淎 lot of this unemployment money is coming in in March, April and May of 2020, and they鈥檙e not going to be paying their tax bill until March or April of 2021. And it鈥檚 easy to forget a year later that you had all that income,鈥� Quianzon said.
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While taxes are not automatically withheld 鈥� and most recipients need every dollar of it right now 鈥� there is a way to pay some now, not later.
鈥淭here鈥檚 an option when filing for benefits online to click a button and have some of your taxes withheld, but that still may not be enough taxes withheld. You may still owe at the end of the year, because it is only a 10% withholding rate.鈥�
The Internal Revenue Service has an online .
