Unemployment Stimulus

[jrumbold]

Some states (California for one) are paying a $25 weekly federal unemployment stimulus payment in their checks to beneficiaries. Does anybody know if this stimulus payment is taxable for federal income tax purposes?

[Koss]

Unemployment

I do not practice in California, but you're asking a federal question, so here goes...

If it's unemployment compensation, it is taxable like any other unemployment compensation, except for the new law that makes the first $2400 tax-free.

If the extra $25 is unemployment compensation, it will probably be included in the taxpayer's Form 1099-G. You treat it just like ordinary unemployment compensation.

Put another way: Adding the word "stimulus" to its description of the payment doesn't change the nature of the income.

If it's not unemployment compensation... if the state is classifying it as something else altogether, then it won't be included in the Form 1099-G.

But if it isn't unemployment compensation, then what is it? Some sort of nontaxable public assistance, like food stamps?

If they state is calling it unemployment compensation, then it's unemployment compensation.

BMK

[BOB W]

I did a return this week where the client kept track of each payment, including the $25. His total of all payments, including the $25, matched the 1099G.

[jrumbold]

I guess I have to wait for the client to receive his 1099G. Interesting enough, on the statements California calls it a Federal stimulus, not unemployment. Also, when the receipitent chooses to have income tax withheld from the UI payment they only withhold on the UI amount, not on the $25 stimulus. This is why I was questioning it.