Stretch Your Dollar: Need-to-know info about the coronavirus relief checks

Stretch Your Dollar

Billions of federal coronavirus relief dollars are going straight to Americans, but will they have to send some of that money back to Uncle Sam at tax time? We are stretching your dollar with what you need to know.

First — the good news — the money in stimulus checks is all yours. It’s tax-free and won’t count as income for government assistance programs.

Now for some bad news — if you’re out of work, you’ll owe federal, and possibly state and local, taxes on any unemployment benefits you collect including the $600 weekly boost approved by Congress as part of its economic rescue package.

When you decide to pay the taxes owed, it depends on your financial situation.

Some experts suggest you have the money taken out weekly so you aren’t stuck with a big tax bill later. Others say it might be better to get the full benefit now and pay the taxes later when you may have a job and more income.

And because unemployment benefits count as income, they may also disqualify you from getting food stamps or federal subsidies for health insurance policies bought on the Affordable Care Act exchanges.

However, neither the stimulus checks nor the extra federal jobless payments will affect your eligibility for Medicaid. You can opt to withhold taxes from your weekly benefit through your state unemployment agency, pay estimated taxes quarterly or wait until you file your return.

If requested, states typically withhold 10-percent for federal taxes and an additional amount to cover their levy, if applicable.

Copyright 2020 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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