04 May Is the $600 unemployment benefit taxable?
Q. I am receiving unemployment benefits due to COVID-19. I also am receiving an additional $600 weekly until July 31 as a result of the CARES Act. Is the $600 taxable federally?
— Out of work
A. Yes, the extra $600 that the unemployed can receive as part of the expanded federal benefits is taxed by the federal government.
Unemployment benefits are not taxable for New Jersey.
If you didn’t elect to have federal taxes withheld, you can go to your unemployment account and change that.
“To help offset your future tax liability, you may voluntarily choose to have 10 percent of your weekly Unemployment Insurance benefits withheld and sent to the Internal Revenue Service (IRS),” the New Jersey Department of Labor website says.
If you don’t withhold taxes, keep in mind that you may need to pay estimated taxes. Otherwise you could get socked with a big tax bill when you file your next tax return.
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This story was originally published on May 4, 2020.
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