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STIMULUS CHECKS WILL NOT BE SUBJECT TO TAXES

STIMULUS CHECKS WILL NOT BE SUBJECT TO TAXES

Stimulus checks will not be taxable, but unemployment benefits will be taxable.

Tax filing season began in the United States, and with it came a different question than in other tax years: How will stimulus payments and unemployment income affect taxation?

Because of the pandemic and the government’s relief program, millions of Americans received both types of payments, but for tax purposes they are treated differently.

One piece of good news about this is that they do not have to pay income tax on stimulus checks, also known as economic impact payments.

Everyone will not have to worry about paying taxes on any type of stimulus check. Last year, about 160 million Americans received their first stimulus check of up to $1,200, or even double that for married couples. In January, a second stimulus check began to be distributed, but this time with a value of up to $600 per person, including children under the age of 17.

Please note that no taxes are due on this money, as the payments were technically an advance on a 2020 tax credit.

Another support that will be provided to people during this crisis is unemployment benefits. However, unlike stimulus checks, taxes do have to be paid on this unemployment money.

Congress has increased the extra weekly payments of $300 through the middle of March, which is in addition to the unemployment benefits already given to each state, according to CNN.

This will be less than what the unemployed received during the past year when they received an additional $600 weekly payment for all four months.

At this point, however, lawmakers have expanded unemployment benefits to give this money to more Americans, including now the self-employed (freelancers), contractors and temporary workers.

Like state unemployment benefits, these federal payments are subject to income tax. So some people may have elected to withhold taxes from the benefit when they registered for unemployment with their state agency, so others may owe the full amount of taxes when they file their 2020 tax return.