10 200 UNEMPLOYMENT TAX BREAK FREE

10 200 UNEMPLOYMENT TAX BREAK FREE

Have a question for Michael and the 7 On Your Side team? Fill out the form HERE!ħOYS's consumer hotline is a free consumer mediation service for those in the San Francisco Bay Area. Take a look at more stories and videos by Michael Finney and 7 On Your Side. We are getting that question a lot at 7 On Your Side. But, keep in mind the tax break would not apply to 2021 EDD benefits - it would only be for those that were delayed from 2020. It's not clear if congressional action is needed, or if the IRS can just waive the tax now. 'To push this through would definitely help a lot of people, especially this year,' Morris agreed. EDD statistics show more than 300,000 claims were still backlogged at the end of 2020, and another 1.4 million were frozen for investigation. It's unclear how many Californians would benefit if the tax break is revived. they should not be penalized for that error.' delays at state agencies were plainly not the fault of the taxpayer. 'Congress clearly intended that $10,200 of benefits in 2020 should be tax-free. “To suggest you can’t do something after the budget is ridiculous,” Tedisco said.The letter, written by North Bay Congressman Mike Thompson (D - St. “In the final weeks of budget negotiations, the state sought clarity from Washington on its ability under that provision to reduce taxes on unemployment insurance benefits, and received it on April 7 as the Legislature was casting its final votes on the budget, making it too late to respond to the change,” Klopott said. However, the bill has not moved out of committee.Ī spokesperson for the Division of Budget, Freeman Klopott said that the federal government originally told states that they were not allowed to reduce taxes if they accepted federal aid. One of the bill sponsors includes Senate Deputy Majority Leader Mike Gianaris, the second top Democrat in the Senate. The bill is sponsored by Democratic Senator Simcha Felder and is co-sponsored by nine other Democrats, along with numerous Republicans. Tedisco is co-sponsoring a bill that would exclude from state income taxes up to $10,200 of unemployment compensation benefits. I think the federal government got it right this time. “And when they finally got that solidified, now they want to tax that money and take some of it back. “When we finally got them into the system, it was a question of getting the checks out of the system,” Tedisco said. Businesses had no choice but to close and New Yorkers struggled for months to even gain access to the unemployment system. Jim Tedisco says 2020 was not a typical year. Lawmakers on both sides of the aisle have been calling for changes to the state’s tax law in order to exclude income taxes on unemployment benefits.Īlthough these benefits have been taxed for the last 50 years, state Sen. We shouldn't be negatively affected because we were affected by something like COVID that no one's ever really been through before and it's not a normal thing.”

“But we had to be on it, because even if our employers did help us for months, at some point they couldn't foot that bill.

“Most of us have jobs or were doing well and didn't want to be on it,” Fallon said. It took Fallon a while to start receiving unemployment benefits due to backlogs and errors in the system.Īnd now he has to be concerned about having to pay potentially $2,500 in taxes while still trying to build back his clients. “Working at a gym, that was like one of the first places people were pretty wary of going into,' Fallon said. Even making it happen is going to be a real big burden on me.”įallon is a personal trainer and when New York went on pause, so did his clients. “I can make it happen, but it's not going to be in one lump sum, because I don't have that. “It’s eye-popping and shocking,” Fallon said. However, State Budget Director Robert Mujica announced the state will still be taxing these unemployment benefits despite changes on the federal level.Īnd for Kevin Fallon, this means he might owe around $2,500 come May 17. People whose adjusted gross income was less than $150,000 can exclude up to $10,200 of unemployment benefits from taxes in 2020. When the federal government passed the American Rescue Plan Act of 2021 in March, Congress included an exemption so at least a portion of unemployment benefits from 2020 will not be federally taxed. Taxes are due in a month, but what does this mean for New Yorkers who were unemployed last year due to the pandemic?

10 200 unemployment tax break