I was mistakenly approved for unemployment in MS (where I live) and received 5 weeks of payment before I found that out. They told me had I apply in FL (worked remotely and never set foot in FL, pay taxes in MS, now have to repay MS unemployment received). I had MS (and FL) unemployment withhold federal taxes.
Now I am arranging to pay back 5 weeks of unemployment from MS. They say I have to repay the federal 10% withheld too instead of just paying back the net I received. They said they can't pull back they money paid to the IRS on my behalf. Is this actually true? I am having problems getting anyone to answer the phone at MS unemployment and am getting conflicting answers from the IRS. Paying MS $353 (eg the $ paid to the IRS) I never saw while still being unemployed is going to be really difficult.
Questions:
1) Is it true that MS can't get back the federal tax paid on my behalf to the IRS since I was paid by mistake and 100% of what I was paid in unemployment was involved. This involves the $600/week pandemic money too, not just my state unemployment amount.
2) What do I do for taxes next year if I can't get that IRS tax money back yet had to pay the gross back to MS (so I will have, in the end, $353 that MS paid to the IRS with no unemployment income from MS)? I read that I will have to claim as income the MS money I received regardless of the fact that I had to pay it back; that the only was I can subtract the money I paid back is as an itemized deduction. That can't possibly correct. Is it? Since I won't be able to itemize that won't work.
3) Will MS issue me a form for how much I paid to the IRS even though I now have no unemployment money paid to me in MS?
4) Will they issue me a form stating that I had zero unemployment money received from them in the end? I can't get anyone at MS unemployment on the phone who knows the answer to that.
5) Since it is unlikely that I will even owe Federal taxes (I am having FL , the state I was supposed to get my unemployment from, withhold money too just in case I finally get a job before the year is out) will I get ALL of the FL and MS federal tax money paid into the system back (presuming I owe no taxes)?
6) How do I list the unemployment money received and then had to pay back on a tax form? Do I even have to list it since I had to pay it all back so 100% of it was an overpayment?
7) Is turbo tax even set up to deal with a situation like this (please tell me yes!!!) or will I have to file by hand to "get it right"?
Thanks!
