As a record number of Americans are currently receiving unemployment insurance, including millions of people for the first time, the Internal Revue Service (IRS) is reminding everyone that these benefits are taxable and failure to have taxes taken out of their weekly unemployment check can result in a significant bill on their 2020 federal return.
Although withholding during this time remains voluntary, unemployment beneficiaries are able to “choose a flat 10 percent withheld from their benefits to cover part or all of their tax liability.” In order to do this, beneficiaries can complete Form W-4V (Voluntary Withholding Request) and submit it directly to the agency issuing your unemployment benefits (Do not send it to the IRS). Unemployment beneficiaries in Minnesota can also log into their unemployment account at uimn.org or call the Applicant Self Service System to change your withholding information. The self-service system is available in English, Spanish, Hmong, or Somali and can be reached Sunday through Friday from 6 am to 8 pm at:
Another option for unemployment beneficiaries is to pay estimated quarterly taxes directly to the IRS. For more information on estimated taxes, please visit irs.gov to access IRS Publication 505 and/or complete Form 1040-ES (Estimated Tax for Individuals). And, for comprehensive information on unemployment benefits as well as taxable and untaxable income, please refer to IRS Publication 525.