Tax Relief

Unemployed folks might get tax breaks Information

BOSTON – Hundreds of thousands of workers lost during the pandemic are at the wheel for federal and state income taxes, but some lawmakers are hoping to give them a break.

A proposal by Rep. Tram Nguyen, D-Andover, backed by a dozen other Democrats, would redress workers who were unemployed last year and owe tax on their services and postpone their state tax obligations until December 31 .

Nguyen, vice chairman of the legislature’s Joint Labor and Human Resources Development Committee, said the goal is to give workers who are still struggling more time to pay their taxes on unemployment benefits.

“There are a lot of people who are still unemployed and they will face a huge tax burden,” she said. “We just want to give them more time to pay it back with no penalties or interest.”

A proposal submitted by Rep. Antonio Cabral, D-New Bedford, would exclude all unemployment benefits paid to workers in the past year from state income taxes for 2020.

Another bill, offered by Rep. Michelle DuBois, D-Brockton, would reimburse those who already paid state taxes on unemployment benefits last year.

The effort is backed by groups advocating for the working poor, saying the economic fallout from the virus continues to affect many low-income families.

“This type of assistance is vital,” said Lewis Finfer, co-director of the Massachusetts Communities Action Network. “Allowing unemployed people who are unemployed to defer their taxes or, in the case of low-wage earners, some kind of tax forgiveness would help to help until their situation improves.”

As in many states, Massachusetts saw unemployment claims as workers lost their jobs due to the government shutdown to keep the coronavirus from spreading. The state’s unemployment rate rose to the highest level in the country – more than 16% last August.

According to the State Department of Unemployment Assistance, more than 1.2 million 1099-G forms were sent to beneficiaries in Massachusetts in January that summarize unemployment benefits paid and taxes withheld.

The agency said that state and federal taxes, including taxes provided under the $ 300 weekly lost wage assistance program, have been withheld from unemployed people who requested it. It’s not clear how many chose to have taxes withheld.

Meanwhile, unemployed workers who have been “overpaid” by receiving unemployment benefits for which they were not qualified are ready to repay the state.

Unlike last year when the state extended the April 15 deadline for everyone to file income tax, there appears to be no move on Beacon Hill to extend this year’s deadline.

According to a recent Jackson Hewitt survey, nearly 2 in 5 unemployed people who had received unemployment benefits in the past year didn’t even know they were taxable.

Several states, including Maryland and Delaware, have passed laws waiving partial or full state income tax on unemployment benefits for 2020. A proposal under consideration by Maine lawmakers would give taxpayers who have been unemployed a $ 300 credit to offset taxes on their benefits.

On Friday, the U.S. Senate debated President Joe Biden’s $ 1.9 trillion coronavirus relief package after adding an amendment that would exempt benefits received last year from taxes of up to $ 10,200 .

Christian M. Wade reports on the Massachusetts Statehouse for the North of Boston Media Group’s newspapers and websites.

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