Unemployment compensation is taxable: Stimulus payments are NOT taxable

 Unemployment insurance payments are taxable by the federal government and states. Recipients can opt to have taxes withheld from their payments. If you failed to do so, you need to prepare now for the tax impact. You won’t, however, owe Medicare and Social Security taxes on jobless benefits as you would with paycheck income.)

The good news is that you don’t have to pay income tax on the stimulus checks, also known as economic impact payments. The first payment in April was for up to $1,200 per person, plus $500 for each child. The second stimulus in December was up to $600 per person, plus $600 for each child.

"Individuals with income of up to $75,000 ($112,500 for individuals filing as “head of household,” typically single parents) and married couples filing jointly with income up to $150,000 qualified to receive the full payment. People with higher incomes got smaller payments or nothing if their income exceeded certain caps."

"If you were eligible for the payments but didn’t receive them for some reason — or didn’t receive the full amount — you can still get the money by claiming a “rebate recovery” credit on your 2020 tax return. You must file a return, even if you’re not otherwise required to do so, to claim the credit."

President Biden has proposed a third round of stimulus payments of as much as $1,400.

Thanks to Ann Carrns of The New York Times.