Idaho State Tax Commission

Heads-Up: Jobless benefits, pandemic grants and bonuses are taxable

Did you receive money from the state due to the COVID-19 pandemic? As you start preparing your 2020 Idaho income tax return, please be aware that you may have received taxable income this year for which state tax wasn’t withheld, even if federal taxes were. That includes but isn’t limited to:

  • Idaho unemployment insurance benefits
  • Pandemic Unemployment Assistance (PUA) for self-employed workers, independent contractors, and gig workers
  • Rebound Idaho grants for small businesses and the self-employed
  • Idaho’s Return-to-Work bonuses for employees idled as a result of the pandemic who returned to work from April 20 through July 15

If you’re concerned about having an income tax bill in 2021, you can take one of the following steps now:

  • Make estimated payments using the Tax Commission’s Quick Pay service at tax.idaho.gov/quickpay. You can find additional payment options at tax.idaho.gov/epay
  • Start setting aside money each month to help cover any tax you may need to pay next April. 

Please contact your financial or tax advisor with any questions about your 2020 taxable income. (Note: Federal economic impact funding – sometimes referred to as “stimulus” payments – isn’t taxable income.)

For other questions: 

  • Call us at (208) 334-7660 in the Boise area or toll free at (800) 972-7660.
  • Email us at taxrep@tax.idaho.gov.

Here are answers to frequently asked questions about the bonuses, grants, and jobless benefits

Why are these items taxable?

Bonuses, grants, and jobless benefits are treated as taxable income by the IRS, and since we follow IRS guidelines, they are taxable by Idaho. The IRS stimulus checks received earlier in the year were excluded from income by federal law, so they aren’t taxable.

How much will I owe?

We don’t have any way to know. The bonuses, grants, and jobless benefits will be added to your income, and your taxes are based on the total taxable income (less than total income). Idaho’s highest tax rate is 6.925% of taxable income.

Where can I go to get an estimated tax amount?

The Tax Commission can’t provide you with estimates of your potential tax liability. You can consult a tax professional to give you an estimate, or you can make an estimate with information you already have.

You can estimate what your tax for 2020 will be by taking the estimate of your total income from the year and subtracting the standard deduction (filing single - $12,400, married filing jointly - $24,800). This will give you your estimated taxable income.

You can then use the Idaho tax tables to find your estimated taxable income amount. The tables will show you what tax is owed based on the taxable income amount.

These will all be estimates, since you can’t know your final income totals until you receive your official W-2s and 1099s.

Why wasn’t there Idaho withholding on these items?

The Idaho Department of Labor offers an option to withhold federal taxes from jobless benefits, but not Idaho taxes.

Idaho income tax wasn’t withheld from grants or bonuses because payments of this type don’t require withholding. 

How do I report the income?

You’ll receive a Form 1099-G from the Tax Commission or the Department of Labor (depending on what you received) that will show the amount to report on your federal income tax forms. The correct amount will automatically carry over to your Idaho tax forms.

 

Posted 12-02-2020
tax pros general

This information is for general guidance only. Tax laws are complex and change regularly. We can't cover every circumstance in our guides. This guidance may not apply to your situation. Please contact us with any questions. We work to provide current and accurate information. But some information could have technical inaccuracies or typographical errors. If there's a conflict between current tax law and this information, current tax law will govern.