Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on the day's biggest business stories

Subscribe to Axios Closer for insights into the day’s business news and trends and why they matter

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Stay on top of the latest market trends

Subscribe to Axios Markets for the latest market trends and economic insights. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sports news worthy of your time

Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tech news worthy of your time

Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Get the inside stories

Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Denver news?

Get a daily digest of the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Des Moines news?

Get a daily digest of the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Twin Cities news?

Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Tampa Bay news?

Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Charlotte news?

Get a daily digest of the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Illustration: Aïda Amer/Axios

People who collected unemployment will receive smaller — or nonexistent — tax refunds this coming year because of a tax law quirk that counts unemployment as taxable income.

Why it matters: Tens of millions of Americans who arguably need the refund the most will wind up financially short for yet another year.

  • Their household finances will remain precarious at a time of dismal job prospects — and they themselves may not be aware of the IRS' Grinchiness on this front.

Where it stands: Countless Americans filed for unemployment benefits for the first time this year, and many probably didn't ask the IRS and state tax authorities to withhold money from the payments the way an employer would — nor did they likely file quarterly tax estimates and payments.

  • Come 2021, they'll have to declare their benefits as income on their 2020 taxes, which could eviscerate any refund.
  • Unlike unemployment benefits, the one-time $1,200 stimulus checks that were sent out this spring under the CARES Act are not taxable income — they're considered tax credits.

The big picture: Even if tax authorities are lenient with their rules because of the pandemic, the fact remains that huge numbers of Americans of all income levels are going to miss out on the tax refunds they typically use to pay bills (including medical ones) or build their nest eggs.

  • "Tax season is usually the largest infusion of cash that low-income families will get in a year," says Leigh Phillips, president and CEO of SaverLife, a nonprofit that encourages low-income people to build up reserves.
  • Already, she said, half of America couldn't cover a routine financial emergency, like a flat tire.
  • And, since March, more than 2.1 million Americans have taken the desperate step of withdrawing funds from their 401(k) plans to cover basic expenses, per The New York Times.

"There are a lot of individuals who do perceive a tax refund as a sort of forced savings account, and that could be quite disappointing when that’s not the case." says Mike Savage, CEO of the tax preparation firm 1-800Accountant, whose clients are primarily very small businesses.

The details: The IRS will withhold 10% of an unemployment check if you ask them to — but that's not sufficient if you fall into a higher tax bracket (as most people do), and it doesn't cover what you owe in state taxes.

  • According to a fact sheet that the IRS put out in August, "withholding is voluntary" and "if a recipient doesn't choose withholding, or if withholding is not enough, they can make quarterly estimated tax payments instead."
  • Payments were due on July 15 and September 15; the next one is due on January 15.
  • But "estimated taxes are often neglected and are misunderstood," Savage tells Axios. "I think it's going to be a big problem."

The bottom line: People who lose their livelihood and have to forgo their tax refund are in for more than a one-two punch. They're likely falling into a financial hole that will be existentially difficult to climb out of.

  • Many people whose jobs were sidelined by the pandemic "have had no ability to earn income now for nine months," says Phillips, whose clients tend to be low-income single mothers.
  • "You don’t recover from that within a year, you don’t recover from that within a generation," she said. "We’re trading short-term pain for a much worse situation down the road."

Go deeper

Guaranteed income programs are proliferating

Illustration: Brendan Lynch/Axios

Cities around the country are starting up guaranteed income programs, which pay low-income residents around $300–$600 a month to help improve their lives.

Why it matters: If successful, backers hope these experiments — which bring the idea of guaranteed basic income from the progressive drawing board to reality — could set the stage for a day when unconditional cash stipends are a ubiquitous national safety net.

Caitlin Owens, author of Vitals
Jan 22, 2021 - Health

The most vulnerable Americans aren't getting enough vaccine information

Data: KFF; Chart: Axios Visuals

Hispanic, Black and lower-income Americans are more likely than white and higher-income Americans to say they don't have enough information about when or where they'll be able to get a coronavirus vaccine, according to new KFF polling.

Why it matters: This further suggests that vaccinating the most vulnerable Americans will be an uphill battle.

European Super League faces collapse after English soccer teams quit

Fans of Chelsea Football Club protest the European Super League outside Stamford Bridge soccer stadium in London, England. Photo: Rob Pinney/Getty Images

The European Super League announced in a statement Tuesday night it's "proposing a new competition" and considering the next steps after all six English soccer clubs pulled out of the breakaway tournament.

Why it matters: The announcement that 12 of the richest clubs in England, Spain and Italy would start a new league was met with backlash from fans, soccer stars and politicians. The British government had threatened to pass legislation to stop it from going ahead.