HONOLULU, Hawaii (HawaiiNewsNow) - A warning to those receiving unemployment benefits: That money is taxable, even the $600 CARES Act funds.
“They do have to report it and as a result it does effect their tax status,” said Scott Murakami, director of the Department of Labor and Industrial Relations.
He said he understands that many of the 240,000 people on unemployment in Hawaii have never filed before — and so may not know how it works.
Also taxable, the federal, $600 weekly plus-up that’s part of the CARES Act and runs through July.
A person who received the money for a 14-week period would have an increase of $8,400 in taxable income.
Claimants are given the option to have 10% federal and 5% state taxes deducted from all the unemployment benefits during the UI process.
Those who can spare some of the money now should, said state Department of Taxation Director Rona Suzuki.
“We do recommend that people pay it when they have cash available but if you cannot afford to pay it now then you do have the option to pay when you do your income tax at the end of the year," she said.
Form N-200V can be found here if you want the voucher to pay estimated taxes.
Benefits from PUA, the federal Pandemic Unemployment Assistance program for independent contractors, is also taxable, but filing for that is separate.
Suzuki said most 1099 form filers already have an idea on how to file estimated taxes.
One benefit that Uncle Sam won’t be coming after you for, the federal stimulus checks. That was free money.
There is some good news on the unemployment front.
The number of new jobless claims filed Thursday — 786 — was the lowest one-day total since mid-March. Murakami hopes that is a sign things are finally leveling off as more businesses reopen.
He hopes 35% of the unemployed will be back to work by the end of the year, and then more next year. But he predicts there will be a consistent amount of unemployed — between 150,000 to 190,000 — for months to come.
The state did get a line of credit approved by the feds for $1.3 billion to cover the department in mid-June.