FORT WAYNE (WPTA21) - Collecting unemployment benefits could have a major impact on your taxes.
Many people filed for unemployment for the first time because of the pandemic and might not have chose to have taxes taken out.
When you file for unemployment, you can choose to have state and county taxes taken out of those unemployment benefits by filling out the Indiana W-4 and federal W-4, said Owner & CEO Liberty Tax Service Dori Miller.
"Most of our problems with the pandemic is getting the word out, and I think we failed to get the word out with unemployment," said Miller.
If you didn't understand that or didn't do it then it could cause some serious consequences on your tax return and you would have to pay in one lump sum instead of as you go, she said.
She said a large majority of their client base at Liberty Tax Service, about 3 out of 5 tax returns, have filed for unemployment and only about half chose to have taxes with-held.
"That's where the snowball effect comes in, so let's pretend you're on unemployment still," said Miller. "You didn't have taxes withheld from it. Now you owe on this tax return and now you gotta make sure you're having taxes withheld or at least saving for that and that's a double whammy on your cash flow, your monthly cash flow."