Did you know that unemployment compensation counts as taxable income? If you received unemployment benefits last year, you may wonder how that income could affect your upcoming tax refund.
When you file your taxes, the total amount received in unemployment will be included in your total taxable income for the year. As a result, you may own more taxes than expected or receive a smaller tax refund.
This article explains how benefits count as taxable income and could lower your refund amount—also, tips are included on maximizing deductions and credits to increase your refund total.
ATC, as a leading provider of Tax Refund Advance, Refund Transfer, and other financial services like Easy Money Loan or EML, is here to help clarify some key points regarding unemployment benefits and taxes.
For starters, it\'s important to note that unemployment benefits like those distributed during the pandemic are considered taxable income by the IRS. You must report the total amount you received on your tax return. While the government may have waived taxes from being withdrawn from weekly checks, you are still liable for taxes owed when you file.
Factor Impacting Refund
The exact impact on your refund will depend on factors like your total income and filing status. In general, though, having additional income benefits means your overall tax liability is likely to increase. The amount of refund you receive may be smaller if you hadn\'t worked or collected benefits at all last year.
Another issue is:
Some taxpayers may even find that having to report unemployment benefits on their returns makes them no longer eligible for certain tax credits. For example, unemployment income could disqualify you from the Earned Income Tax Credit if it pushes your total income above the allowed limit.
So, How Do We Fix this Issue?
The good news is that ATC Income Tax’s Tax Refund Advance service allows taxpayers to access part of their anticipated refund upfront instead of waiting weeks after filing.
By applying for a Tax refund advance online through Easy Money Loan Service, you can get your funds transferred to your Faster Money Card within 1-2 business days.
If the size of your refund ends up lower than expected because of unemployment benefits, a refund advance ensures you don\'t have to wait to bring in much-needed cash flow.
Maximize Your Refund with ATC Income Tax
ATC Income Tax offers additional services to simplify your tax filing experience:
Easy Money Loan (EML)
For loans up to $2,500 or 25% of your anticipated refund, 0% APR financing is deducted from your refund. Higher amounts are offered with applicable interest fees.
Refund Transfer (RT)
Get your refund amount (less fees) via check within 8-15 days of IRS acceptance without out-of-pocket costs.
Faster Money Card
Choose direct deposit to our prepaid Visa card for fast, safe, and convenient refund delivery.
E-File IRS Direct & W2 Download
File your return electronically and access W2 documents to qualify for the fastest possible refund.
In Summary:
Unemployment benefits may impact your refund due to becoming additional taxable income. But services like Tax Refund Advance can help you access funds sooner rather than later while you file. Contact ATC Income Tax for any other tax-related questions.
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