Collecting Unemployment Benefits Due to COVID-19? Prepare for a Hefty Tax Bill

Millions of Americans have been hit hard financially due to the coronavirus pandemic. Approximately 36.5 million U.S. adults have filed for unemployment benefits over the past two months, according to the Department of Labor, and if the virus isn't contained soon, that number could continue to skyrocket.

Even with the help of unemployment benefits, however, many people are still struggling. To provide relief, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which provided millions of Americans with stimulus checks and also allowed unemployed workers to collect an additional $600 per week in unemployment benefits.

While stimulus checks are tax-free and won't count toward your income, unemployment benefits are a different story. If you're receiving benefits now, there's a good chance you could be hit with a hefty tax bill later.