Question

I have a question about tax on unemployment income — Will unemployment benefits tax have ramifications on my refund?

Answer

Regarding unemployment benefits tax, unemployment benefits are taxable income. If your income goes up because you receive unemployment, your tax liability, due to tax on unemployment income, can go up, too. This means your refund will be lower or you’ll owe more taxes — Unless you covered the increase for tax on unemployment income by either:

  • Withholding from your unemployment benefits
  • Paying estimated taxes

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