You may be wondering if you need to file taxes as an unemployed person. You might not even know what kind of taxes you need to pay or how much those taxes will cost you. We want to address these frequently asked unemployment tax questions, as a record number of taxpayers are receiving unemployment compensation as a result of COVID-19.
Is it necessary for me to file taxes if I am unemployed?
The short answer; is it depends. This is determined by your income and filing status. To see if you need to file a tax return, the IRS offers a free tool to determine whether or not you’re eligible to file for a return. The IRS is likely to reject your return if you don’t have any taxable income to report when you file.
Do I have to pay unemployment taxes?
The IRS considers your unemployment benefits to be taxable income (and most states, too). If your total income for the year – including unemployment benefits – is greater than the filing threshold, some of it may be taxed. Unemployment benefits for 2020 were tax-free in part. You can choose to have taxes withheld from your unemployment income throughout the year or make estimated payments to avoid being surprised with a tax bill when you file.
If I file a tax return, will I have to pay taxes?
Filing a tax return does not always imply that you owe money to the IRS. It does, however, inform the IRS of your annual income, personal circumstances, and any applicable deductions and credits. That is why, in order to receive a tax refund (if you are owed one), you must file a tax return.
Unemployed & Have To Pay Taxes
No taxpayer in their right mind wants to be hit with that tax bill, especially if it tends to be a struggle to pay off. The tax credit will not be enough to satisfy any tax debts individuals and families may have with the IRS. But there is a new and improved relief program that consolidates many major relief programs into a one-size-fits-all assistance program. Any issues regarding back taxes, unfiled years, or any other tax-related problems may be solved through one program; the IRS Fresh Start Program!
How Simple Is Qualifying?
Considering that the Fresh Start Program is a federal program, you would think meeting the qualifications may be very difficult, but really, it’s a lot simpler and quicker than you think. Take the following steps in order to find out if you are eligible in as little as 3 minutes.
- Fill out some basic information about yourself and your back taxes here.
- Have a representative reach out to you to discuss your eligibility.
- Go through the enrollment process and finally reduce or eliminate your tax liabilities.