Minnesota's Department of Employment and Economic Development did not respond to requests for comment. She now owes over $1,000 in taxes to her state and her federal return was reduced by over $2,000. While she also opted to have 10% withheld from every payment for taxes, she similarly discovered that the withholding was only applied to her standard unemployment benefits. A Minnesota resident, who asked that her name be withheld to protect her privacy, tells CNBC Make It that she collected over $16,400 in unemployment benefits last year. It's not just California where unemployed Americans are finding that only part of their benefits payments were withheld. It's not just California that didn't withhold taxes Levy did not comment on whether this was also the case with the $300 enhanced unemployment payments. "This withholding option was not available for the $600 pandemic additional compensation payments, which needed to be quickly implemented at the time to get benefit funding to eligible claimants in need of them," says Loree Levy, deputy director of public affairs. "People who don't have jobs are on the hook to come up with this money in a time when money is very difficult to come by," Nichols says.Ĭalifornia's Employment Development Department said in an emailed statement to CNBC Make It that out-of-work residents are given the option to withhold on standard state-issued unemployment insurance and federal pandemic unemployment assistance benefits. Otherwise, she's planning on taking money from her individual retirement account (IRA) to cover the extra expense. Nichols is waiting to file her 2020 taxes in hopes that the $1,400 stimulus payments will hit her bank account before her taxes are due and can help her cover her tax bill. "I think it would have been a safe assumption if you check a box to withhold taxes, that you withhold taxes from all the money that they're going to be sending you." "I don't understand why, when I told them to withhold the 10%, they only withheld it from the actual unemployment money, not what I call the 'bonus money,'" Nichols says.
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