Some unemployed workers waited more than a year to receive their EDD benefits -- and missed out on a big tax break through no fault of their own.
The Department of Labor has agreed not to make workers repay benefits they received by mistake, as long as they were not obtained by fraud."Congress clearly intended that $10,200 of benefits in 2020 should be tax-free.... delays at state agencies were plainly not the fault of the taxpayer... they should not be penalized for that error."
It's unclear how many Californians would benefit if the tax break is revived. EDD statistics show more than 300,000 claims were still backlogged at the end of 2020, and another 1.4 million were frozen for investigation.It's not clear if congressional action is needed, or if the IRS can just waive the tax now. But, keep in mind the tax break would not apply to 2021 EDD benefits - it would only be for those that were delayed from 2020. We are getting that question a lot at 7 On Your Side.
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