Future Taxes Could Be 'Big Shock' For Workers Collecting Unemployment, Expert Warns
BOSTON (CBS) - Massachusetts has the highest unemployment rate in the country. Make-up artist Manda Carco is one of more than a million Massachusetts residents receiving government unemployment benefits.
Carco says she loves her job, but has not been able to work since the pandemic.
"A majority of my income is from weddings and has dwindled down to just about nothing. I want to work so badly, but the work just isn't there," said Carco.
The weekly $600 payments added to regular unemployment benefits through July were crucial for workers around the country and across the state. Without it, Carco says, "we wouldn't have been able to survive."
But tax expert Beth Logan warns the payments come at a future cost.
"You owe federal and state tax. If people weren't prepared, could be thousands of dollars depending on your situation. I think it is going to be a big shock," said Logan.
Taxes are automatically collected from regular unemployment benefits, but that is not the case for the supplemental payments.
But Logan says that is not the only issue. She says getting the extra money could jeopardize health insurance coverage, telling WBZ that if one has received the extra money, it could put them in a different tax bracket. That could get them pushed off Massachusetts Health, meaning they would have to pay those tax credits back.
Experts say the new $300 payment that started Friday is also taxable. They advise that those getting the money have taxes taken out.
Tax preparers also say those who have gone back to work should think twice before deferring taxes on their paychecks, as that money, too, will have to be paid back next April.