As if the coronavirus crisis didn’t harm workers enough, New York state wants to rub salt in the wounds of the unemployed by refusing to give them a little tax break on their unemployment benefits.
Under the $1.9 trillion American Rescue Plan, the big aid package passed by Congress last month, the federal government exempts from federal income taxes the first $10,200 in unemployment benefits received in 2020. The break would cover 17 weeks of the $600-per-week benefit.
It’s a modest benefit that might net an unemployed individual about $1,000 or more on their federal taxes and $500 on their state taxes.
We say modest. But modest is a relative term when you’ve been forced out of work. That $500 or $1,000 in tax savings could be a month’s rent or a few weeks of food for a family, or a few car payments or other household expenses. When you’re out of work, every dollar counts.
But the benefit right now only applies to federal taxes. States have the option of offering it themselves.
So far, New York is in a growing minority of states that plans to tax the entirety of the unemployment benefits, deciding so far at least not to give these most desperate residents a little extra help.
What the government giveth, the government taketh away. Especially in New York.
According to a report by CNBC, New York is one of only 13 states, as of Monday, that were planning to tax the full amount of unemployment benefits and not match any part of the federal government break.
The remaining states were either offering a full or partial break on the first $10,200 of benefits or don’t tax income at all.
The 4.6 million New Yorkers who were forced to collect unemployment during the crisis not only don’t know when or if they might get this tax break, but they’re also running up against the clock.
They need to know whether they can claim the exemption before they can file their state income tax returns.
The tax filing deadline was recently extended from the traditional April 15 date to May 17, so that means these residents can wait a little longer for the Legislature to pass the exemption. But not much longer.
And many might want to file as soon as possible, perhaps to get a tax return that they could use to help pay their bills.
Some state lawmakers aren’t letting this pass.
Sen. Jim Tedisco is among the cosponsors of a bill (S5125), along with local Sens. Daphne Jordan and Dan Stec, that would grant the exemption. A companion bill (A6584) has been introduced in the Assembly.
People who’ve lost their jobs, permanently or temporarily, as a result of covid need all the help they can get.
New York state government is getting more than $12 billion from the federal aid package, helping it avert spending cuts and tax hikes and to close its budget deficit.
Surely it can afford to extend this moderate bit of assistance to help some of the residents hardest hit economically by the pandemic.
What’s the holdup?