The federal government has said you will not have to pay taxes on the coronavirus stimulus payment, but if you’re collecting unemployment, that money will be subject to income tax.
So far almost 130 million stimulus payments have been sent out by the Internal Revenue Service, and more will be hitting accounts, CNN reported.
Americans who are single can get a payment of up to $1,200 if they make less than $99,000 a year. Couples get up to $2,400 as long as they don’t make more than $198,000 a year. More money is given if there are children. The amount is based on either your 2018 or 2019 tax return. If you make more than the threshold for 2020, you won’t have to pay it back and it also won’t count against you for income-based eligibility for government programs unless you save it for more than 12 months, CNN reported.
That money isn’t taxed, but unemployment benefits are, according to the IRS.
About 1 in 5 Americans have filed for benefits, and in addition to the normal weekly amount received, they’re getting an extra $600 a week. But all that money is taxed not only on a federal level but also state and local levels, depending on how the state operates, CNN reported.
The extra $600 a week is not supposed to count against recipients when it comes to Medicaid and the Children’s Health Insurance Program, but it could be used when determining eligibility for Supplemental Nutrition Assistance Program, CNN reported. Unemployment will also be used to determine how much in subsidies are given for the Affordable Care Act.