![]() ![]() H&R Block did not immediately respond to Insider's request for comment. "We are implementing IRS guidance on unemployment income within TurboTax, and updates will be available in product this evening, March 18." "We're working around the clock to make updates to TurboTax based on the recently enacted American Rescue Plan so our customers can file with confidence and get their maximum refund," Ashley McMahon, a TurboTax spokeswoman, told Insider. According to CNBC, online tax preparers H&R Block and TurboTax haven't updated their software to account for the changes, with experts saying that taxpayers who are eligible for the tax break should wait to file. Taxpayers with income of less than $150,000 in 2020 are eligible for a tax exemption on the first $10,200 of unemployment benefits from the federal government. But H&R Block and TurboTax customers will have to wait for some of it. President Joe Biden signed a $1.9 trillion stimulus plan last week, and Americans are eager to receive their stimulus checks and get tax refunds. Since taxes will be withheld from each payment, it will reduce the amount you receive weekly, but can prevent you from owing a hefty tax bill the following tax season.Account icon An icon in the shape of a person's head and shoulders. To have your unemployment checks taxed like a regular paycheck, you can fill out Form W-4V. That noted, because these payments are based on your estimated total income, you could end up paying too much - resulting in a refund - or too little - which would require an extra payment come the April 18 deadline. Many sole proprietors and freelancers make estimated quarterly tax payments, which lets you spread out what you owe into four annual payments. Your options include making estimated quarterly tax payments in advance, having your taxes automatically withheld from each payment or paying in full when you file your tax return the following year. That noted, it can be devastating to get hit with a big tax bill in the spring. If you need the full payment to get by, it may sound appealing to put off paying taxes in the hope of being in a stronger financial situation later on. Whether or not you decide to withhold taxes from your unemployment benefits depends on your financial situation. How to avoid a large tax bill in the future Here's everything you need to know about unemployment benefits for this tax season. While taxes had been waived on up to $10,200 received in unemployment for those making less than $150,000 in 2020 - the first year of the pandemic - that was only temporary relief and no such tax break exists for UI received in 2021. And this tax season, you won't be able to rely on a tax break for unemployment insurance, either. Unlike stimulus checks, which you don't have to pay taxes on, unemployment payments are considered taxable income and will need to be accounted for on your 2021 return. ![]() However, if you received any jobless benefits at all last year, you might be in for a shock when you file your taxes. Expanded unemployment benefits, which ended on Labor Day in 2021, provided a lifeline for millions throughout the pandemic. Even though numbers decreased in 2021, they're still above prepandemic levels. Unemployment numbers surged at the start of the COVID-19 pandemic, topping out at 14.7% in April 2020. This story is part of Taxes 2022, CNET's coverage of the best tax software and everything else you need to get your return filed quickly, accurately and on-time. ![]()
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