SPRINGFIELD, Mo. — One Missouri State professor is working to give insight on your next tax return as a record number of people filed for unemployment benefits this year due to the pandemic.
You may remember lawmakers passed the CARES Act in March, which boosted unemployment benefits across the country and expanded eligibility for benefits.
Dr. Kerri Tassin with Missouri State University says with many new terms and guidelines, taxpayers should prepare for the upcoming tax season to avoid unexpected bills on their tax returns.
The federal government taxes unemployment benefits as ordinary income, but social security and medicare taxes are exempt.
Most states, including Missouri, tax these benefits as well.
Tassin noted that the stimulus checks awarded earlier this year will not be taxed.
However, the additional $600 per week in coronavirus relief some received, will be.
Finally, she says it’s important to understand that unemployment and workers’ compensation are not the same thing.
“Workers’ compensation results when an employee becomes sick or injured perhaps in their place of employment,” Tassin said. So they may receive workers’ compensation until they’re able to return to work. Workers’ compensation is not a taxable benefit. Unemployment benefits are taxable so they are very different and treat differently on tax returns.”
Tassin recommends contacting your state’s unemployment office for more information, or visiting the IRS website here.