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Video: How Does a Furlough or Lay-off Impact Your Taxes

Updated for Tax Year 2020


OVERVIEW

Being furloughed or laid off are different and can result in implications for you and your taxes.


The federal tax filing deadline for individuals has been extended to May 17, 2021. Quarterly estimated tax payments are still due on April 15, 2021. For additional questions and the latest information on the tax deadline change, visit our “IRS Announced Federal Tax Filing and Payment Deadline Extension” blog post.

For information on the third coronavirus relief package, please visit our “American Rescue Plan: What Does it Mean for You and a Third Stimulus Check” blog post.


 
Video Transcript:
Being furloughed or laid off can result in different implications for you and your taxes. A furlough means your hours and pay are temporarily reduced. This could result in you not working at all for a while, or it could mean you work fewer hours, but you're still an employee of the company and could still continue to receive employee benefits. A lay-off is a little different. This means you're no longer employed by the company. Lay-offs can be temporary or permanent, and you'll normally lose employee benefits. Now whether you're furloughed or laid off, you could qualify for unemployment if your income drops low enough. Check your state's unemployment rules to see if you're eligible for unemployment compensation. And remember to report any unemployment benefits you do receive as taxable income on your 1099-G form. A lower income also usually means you'll owe less federal income tax. This could result in a federal tax refund when you file your tax return. TurboTax is here to support you. For more tax tips and support, visit turbotax.com.

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