Michigan waives penalties for underpaid unemployment income taxes
LANSING, Mich. (WJRT) - Michiganders who collected state unemployment benefits last year will not be required to pay penalties and interest related to underpaid estimated tax payments.
According to the Michigan Department of Treasury, the waiver is effective immediately and covers unemployment benefits paid in 2020.
Unemployment benefits are subject to state and federal income taxes. State laws require everyone who receives unemployment benefits to make quarterly estimated tax payments when their annual tax liability exceeds $500.
The estimated quarterly payments usually are subject to late fees and interest, but they will not be this year. The waiver is automatic for everyone who receives unemployment benefits, so no additional application is required.
“COVID has disrupted our lives in numerous ways – and many Michiganders are depending on unemployment benefits to get them by during this extraordinary time,” State Treasurer Rachael Eubanks said. “Having to pay penalties and interest on unemployment benefits is the last thing individuals should be worried about when they go to pay their taxes.”
Michigan will begin processing income tax returns on Friday. The deadline for tax returns remains April 15.
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