Stimulus Checks: Over 130 million Americans have received stimulus checks from the federal government as part of a provision of the CARES Act. This money is tax-free and will not affect any refunds you might be owed. Additionally, you will not have to return any funds if you received a payment but wind up earning more than the threshold outlines for 2020 eligibility.
Individuals who did not qualify for the stimulus this calendar year based on their prior year’s earnings, but earn less than the threshold this year, will receive a stimulus payment when they file their 2020 tax return. Also, stimulus payments will not count as income for government assistance programs, such as Medicaid or food assistance. However, the money could be considered part of an individual’s assets if it is saved for more than 12 months.
Unemployment Insurance: Any federal and/or state unemployment payments individuals receive are subject to federal, state, and local income taxes. The $600 boost from the CARES Act could provide nearly $10,000 in income if individuals receive it for the full four months. That figure does not account for state benefits an individual may receive.
Individuals can choose to withhold taxes from their weekly payment through NCDES, pay estimated taxes quarterly, or pay when they file their tax return. Individuals will receive a Form 1099-G showing the amount of unemployment compensation they received for the year and any income tax withheld from those payments.
The extra $600 payment included in unemployment payments from the CARES Act will not disqualify individuals or their families from Medicaid or the Children’s Health Insurance Program. However, the boost may make a person ineligible for Supplemental Nutrition Assistance Program funds. Unemployment compensation also counts as income regarding the Affordable Care Act.