Michiganders who collected state unemployment benefits last year will not be required to pay penalty and interest related to under-paid estimated tax payments, according to the Michigan Department of Treasury.  If you collected unemployment, you still have to pay income tax on it, but if you owe, you won’t be penalized for paying late.

In Michigan, taxpayers are required to pay quarterly estimated tax payments when the annual tax due is expected to exceed $500 or more. Taxpayers who fail to pay an estimated quarterly tax payment are typically subject to penalties and interest.

Effective immediately, the state Treasury Department has granted an automatic waiver of all penalties and interest related to underpaid estimated tax payments owed by taxpayers who received unemployment benefits in 2020.

All taxpayers who received unemployment during the 2020 tax year will automatically receive this waiver. Because this waiver is automatic, taxpayers do not need to contact the state Treasury Department or provide any additional documentation for a waiver be applied.

Unemployment benefits are subject to federal and state taxes. Taxpayers who chose to not have taxes withheld from their benefits will owe any outstanding tax.

Additional details related to waiver of penalties and interest on estimated tax payments can be found in the state Treasury Department’s Notice to Taxpayers, “Estimated Tax Penalty and Interest Waiver for Individuals who Received Unemployment Benefits in Tax Year 2020.”

The state of Michigan will begin processing state individual income tax returns on Feb. 12. For the benefit and convenience of taxpayers, both the beginning and end of the individual income tax filing season are the same as the Internal Revenue Service.

To learn more about the state of Michigan’s individual income tax, go to www.michigan.gov/incometax.

1240 WJIM AM logo
Enter your number to get our free mobile app

LOOK: Here are 25 ways you could start saving money today

These money-saving tips—from finding discounts to simple changes to your daily habits—can come in handy whether you have a specific savings goal, want to stash away cash for retirement, or just want to pinch pennies. It’s never too late to be more financially savvy. Read on to learn more about how you can start saving now. [From: 25 ways you could be saving money today]

More From 1240 WJIM AM