Taxes on unemployment might be refunded
Q: I was furloughed in 2020 and received unemployment benefits from which I had income tax withholding. I have heard that they may not be taxable. Is this true?
— J.G., St. Cloud
A: Part of the American Rescue Plan Act of 2021 provides that up to $10,200 of unemployment benefits received in 2020 by a household is not taxable if household income is less than $150,000. The Internal Revenue Service is currently updating its worksheets and software and advises that you delay filing your tax return until it has completed the changes for processing unemployment benefits. If you have already filed your return, the agency will be sending out information on how you can claim any additional refund due.
— Sylvia “Chris” Presley
Q: Is there a legal way to take my required minimum distribution and put it into my Roth IRA this year? I am 83 and have no earned income. Thanks.
— R.M., Leesburg
A: Currently, you cannot avoid it by doing a Roth IRA conversion. However, if you donate it to a 501(c3) charity via a qualified charitable distribution, you do not have to pay taxes on the withdrawal, but the distribution must go directly to the non-profit.
— John West III
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