(INDIANAPOLIS) – If you collected unemployment last year, you may have a mistake on your state taxes.
President Biden’s pandemic relief bill exempted $10,200 of unemployment benefits from federal income taxes. But the bill didn’t pass until March, with tax season already well underway. And Indiana legislators opted not to change the state tax code to incorporate the change. That means taxpayers with unemployment benefits in 2020 needed to add back that money to calculate their taxable income.
Some tax preparation software updated to catch the change, but some didn’t. If that money wasn’t added back, you’ll be getting a bill for as much as $329 in underpaid taxes.
Department of Revenue general counsel Chris Russell says the department is waiving a late-payment penalty, since it’s not your fault. But it doesn’t have the authority to write off interest. Governor Holcomb did that last week by executive order.
The penalties and interest could have tacked on another $43 to your tax bill.
