Many clients received new and different types of income during 2020. Even if you did not already receive unemployment income, it is something you may encounter in 2021.
Please keep in mind the following items relating to unemployment income:
- Unemployment income will be taxed. Even any federal ‘additional’ unemployment benefits are taxed, make sure you plan ahead.
- Unemployment income is usually not available to business owners. However, due to the pandemic, even most business owners and self-employed individuals are able to apply for unemployment income benefits.
- Applying for unemployment benefits is not easy and wait times for applying have been increasing in recent months. If you plan to apply for unemployment, you should plan on it taking at least two- three weeks.
- If you are working (example- part time work), you may be able to apply for unemployment income, but you will have to report your income with your unemployment agency.
- Unemployment income is not a long term solution, if you are eligible for unemployment benefits you may be required to provide additional information such as:
- Proof of your ability to qualify for unemployment
- Proof that you are looking for employment
- Proof that you did not receive additional income during this time
- If you are a business owner, you may not be able to work as you normally would and it may prevent you from applying for other benefits such as grants or PPP loans
We help many other individuals and businesses with tax reporting, general tax compliance and advice. If you do not feel comfortable taking care of these filings, reach out to us at [email protected].