😱 Holy crap!! I never heard a word about them making the first $10,200 in unemployment benefits tax exempt until after people like me filed our taxes and found that we were being hit with some pretty hefty tax bills. I think this is going to be a real nightmare to correct. I always get a refund so I file my taxes as early as possible and this year was no different. (or so I thought) I filed my taxes electronically as soon as the software allowed it and because I was unemployed for most of 2020 AND I did not have any taxes being withheld from my weekly benefits, I ended up owing over $1,200 in federal tax. Because I owed them over $1,000, I was charged a penalty and I was told that I will need to make estimated tax payments in each quarter of 2021. Figuring that it is what it is, I went ahead and e-filed my returns and arranged for my federal taxes to be paid from my bank account on April 1st.
I honestly don't see how the IRS will be able to correct this. I was curious how much of a difference it would make, so I experimented and ran my numbers again with $10,200 less in unemployment, and it looks like I will now be due a refund of most of the federal tax that I was charged with my initial filing, and it removes the penalty that I was charged for owing over $1,000 and it removes the quarterly estimated tax payments that I was told I need to make in 2021. I'll be shocked if they can correct this at all, and especially if it happens before April 15th when my first quarterly estimated tax payment was supposed to be paid. I guess one bit of good news I can look forward to will be if the $1,400 stimulus payment gets into the bank before the 1st of April when I arranged for the IRS to get paid money that I really will now not owe them... 😕
