INDIANAPOLIS – Are you withholding taxes on your unemployment check? You may want to start; otherwise you could see a very large bill come April 2021.
“I think there’s a lot of people that do not know that,” said Steve Riddle with Somerset CPA’s. “They would assume that a government payment would not be taxable, and in fact years ago, it wasn’t taxable.”
But it is now.
“I would recommend that they take out at least 10 percent,” said Riddle.
However, he said the exact amount you should take out really depends on each person. He recommends talking to an expert or going online.
“The IRS does have a tool on their website that you can enter your unique information and get a very good approximation,” said Riddle.
Ashley Means has already been taking taxes out of her unemployment checks.
“It shows the breakdown of how much taxes they take out of state and how much they take out of federal,” explained Means.
She could technically go back to her part-time serving job right now, but she’s making more on unemployment.
“I know a lot of servers are, especially part-time servers, are probably making more on unemployment than they would be working,” said Means.
It’s a problem Indiana U.S. Senator Mike Braun said he tried to vote to fix.
“In some states where the average wages were higher you had to pick a figure. Because they didn’t think you could use multiple figures because you do have 50 different state unemployment agencies that had to do the leg work,” said Sen. Braun.
He said it’s something he would hope congress would change the next time around.
“One of the consequences of doing something quickly in a place where normally it has plenty of time doesn’t do things efficiently and effectively,” said Braun.
(This story was originally published on May 21, 2020)
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