By Payroll and Entitlements Editorial Staff
The IRS has reminded people receiving unemployment compensation (beneficiaries) that they can have tax withheld from their benefits now to help avoid owing taxes on this income when they file their federal income tax return next year.
Quarterly estimated tax payments. If a beneficiary doesn’t choose withholding, or if withholding is not enough, they can make quarterly estimated tax payments instead. The payment for the first two quarters of 2020 was due on July 15. Third and fourth quarter payments are due on September 15, 2020, and January 15, 2021, respectively.
Types of payments. Here are some types of payments taxpayers should check their withholding on:
- Unemployment compensation includes: Benefits paid by a state or the District of Columbia from the Federal Unemployment Trust Fund
- Railroad unemployment compensation benefits
- Disability benefits paid as a substitute for unemployment compensation
- Trade readjustment allowances under the Trade Act of 1974
- Unemployment assistance under the Disaster Relief and Emergency Assistance Act of 1974, and
- Unemployment assistance under the Airline Deregulation Act of 1978 Program.
Additional information on unemployment, can be retrieved here. (IR-2020-185, Aug. 19, 2020).
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