Page 75 - 2020 Publication 17

14:38 - 19-Jan-2021
Page 73 of 138
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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
on Schedule A (Form 1040), line 16, if you item- made by the state to its employees who aren’t 2. To reimburse or pay reasonable and nec-
ize deductions and the amount is more than covered by the state's unemployment compen- essary expenses incurred for the repair or
$3,000. See Repayments, earlier. sation law. Although the payments are fully tax- rehabilitation of your home or repair or re-
able, don’t report them as unemployment com- placement of its contents to the extent it’s
Tax withholding. You can choose to have pensation. Report these payments on Schedule due to a qualified disaster;
federal income tax withheld from your unem- 1 (Form 1040), line 8.
ployment compensation. To make this choice, 3. By a person engaged in the furnishing or
complete Form W-4V, Voluntary Withholding Welfare and Other sale of transportation as a common carrier
Request, and give it to the paying office. Tax because of the death or personal physical
will be withheld at 10% of your payment. Public Assistance injuries incurred as a result of a qualified
disaster; or
If you don’t choose to have tax withheld Benefits 4. By a federal, state, or local government,
! from your unemployment compensa- agency, or instrumentality in connection
CAUTION tion, you may be liable for estimated Don’t include in your income governmental ben- with a qualified disaster in order to pro-
tax. If you don’t pay enough tax, either through efit payments from a public welfare fund based
withholding or estimated tax, or a combination upon need, such as payments to blind individu- mote the general welfare.
of both, you may have to pay a penalty. For als under a state public assistance law. Pay- You can exclude this amount only to the extent
more information on estimated tax, see chap- ments from a state fund for the victims of crime any expense it pays for isn’t paid for by insur-
ter 4. shouldn’t be included in the victims' incomes if ance or otherwise. The exclusion doesn’t apply
they’re in the nature of welfare payments. Don’t if you were a participant or conspirator in a ter-
Supplemental unemployment benefits. deduct medical expenses that are reimbursed rorist action or a representative of one.
Benefits received from an employer-financed by such a fund. You must include in your in- A qualified disaster is:
fund (to which the employees didn’t contribute) come any welfare payments that are compen-
aren’t unemployment compensation. They are sation for services or that are obtained fraudu- • A disaster which results from a terrorist or
taxable as wages. For more information, see lently. military action;
Supplemental Unemployment Benefits in sec- • A federally declared disaster; or
tion 5 of Pub. 15-A, Employer's Supplemental Reemployment Trade Adjustment Assis-
Tax Guide. Report these payments on line 1 of tance (RTAA) payments. RTAA payments • A disaster which results from an accident
Form 1040 or 1040-SR. received from a state must be included in your involving a common carrier, or from any
income. The state must send you Form 1099-G other event, which is determined to be
Repayment of benefits. You may have to to advise you of the amount you should include catastrophic by the Secretary of the Treas-
repay some of your supplemental unemploy- in income. The amount should be reported on ury or his or her delegate.
ment benefits to qualify for trade readjustment Schedule 1 (Form 1040), line 8. For amounts paid under item (4), a disaster
allowances under the Trade Act of 1974. If you is qualified if it’s determined by an applicable
repay supplemental unemployment benefits in Persons with disabilities. If you have a disa- federal, state, or local authority to warrant assis-
bility, you must include in income compensation
the same year you receive them, reduce the to- tance from the federal, state, or local govern-
tal benefits by the amount you repay. If you re- you receive for services you perform unless the ment, agency, or instrumentality.
compensation is otherwise excluded. However,
pay the benefits in a later year, you must in-
clude the full amount of the benefits received in you don’t include in income the value of goods, Disaster mitigation payments. You can ex-
services, and cash that you receive, not in re-
your income for the year you received them. clude from income any amount you receive
Deduct the repayment in the later year as an turn for your services, but for your training and that’s a qualified disaster mitigation payment.
adjustment to gross income on Form 1040 or rehabilitation because you have a disability. Ex- Qualified disaster mitigation payments are most
1040-SR. Include the repayment on Schedule 1 cludable amounts include payments for trans- commonly paid to you in the period immediately
portation and attendant care, such as inter-
(Form 1040), line 22, and see the instructions following damage to property as a result of a
there. If the amount you repay in a later year is preter services for the deaf, reader services for natural disaster. However, disaster mitigation
the blind, and services to help individuals with
more than $3,000, you may be able to take a payments are used to mitigate (reduce the se-
credit against your tax for the later year instead an intellectual disability do their work. verity of) potential damage from future natural
of deducting the amount repaid. For more infor- Disaster relief grants. Don’t include post-dis- disasters. They’re paid to you through state and
mation on this, see Repayments, earlier. aster grants received under the Robert T. Staf- local governments based on the provisions of
the Robert T. Stafford Disaster Relief and
Private unemployment fund. Unemployment ford Disaster Relief and Emergency Assistance Emergency Assistance Act or the National
benefit payments from a private (nonunion) Act in your income if the grant payments are Flood Insurance Act.
made to help you meet necessary expenses or
fund to which you voluntarily contribute are tax- You can’t increase the basis or adjusted ba-
able only if the amounts you receive are more serious needs for medical, dental, housing, per- sis of your property for improvements made
sonal property, transportation, child care, or fu-
than your total payments into the fund. Report with nontaxable disaster mitigation payments.
the taxable amount on Schedule 1 (Form 1040), neral expenses. Don’t deduct casualty losses or
medical expenses that are specifically reim-
line 8. bursed by these disaster relief grants. If you Home Affordable Modification Program
(HAMP). If you benefit from Pay-for-Perform-
Payments by a union. Benefits paid to you as have deducted a casualty loss for the loss of ance Success Payments under HAMP, the pay-
an unemployed member of a union from regular your personal residence and you later receive a ments aren’t taxable.
union dues are included in your income on disaster relief grant for the loss of the same res-
Schedule 1 (Form 1040), line 8. However, if you idence, you may have to include part or all of Mortgage assistance payments under sec-
contribute to a special union fund and your pay- the grant in your taxable income. See Recover- tion 235 of the National Housing Act. Pay-
ments to the fund aren’t deductible, the unem- ies, earlier. Unemployment assistance pay- ments made under section 235 of the National
ployment benefits you receive from the fund are ments under the Act are taxable unemployment Housing Act for mortgage assistance aren’t in-
includible in your income only to the extent compensation. See Unemployment compensa- cluded in the homeowner's income. Interest
they’re more than your contributions. tion under Unemployment Benefits, earlier. paid for the homeowner under the mortgage as-
sistance program can’t be deducted.
Guaranteed annual wage. Payments you re- Disaster relief payments. You can exclude
ceive from your employer during periods of un- from income any amount you receive that’s a Medicare. Medicare benefits received under ti-
employment, under a union agreement that qualified disaster relief payment. A qualified dis- tle XVIII of the Social Security Act aren’t includi-
guarantees you full pay during the year, are tax- aster relief payment is an amount paid to you: ble in the gross income of the individuals for
able as wages. Include them on line 1 of Form 1. To reimburse or pay reasonable and nec- whom they’re paid. This includes basic (Part A
1040 or 1040-SR. essary personal, family, living, or funeral (Hospital Insurance Benefits for the Aged)) and
supplementary (Part B (Supplementary Medical
State employees. Payments similar to a expenses that result from a qualified dis- Insurance Benefits for the Aged)).
state's unemployment compensation may be aster;
Chapter 8 Other Income Page 71