In response to the fact that an unprecedented number of Americans are currently claiming unemployment benefits, the IRS has issued a reminder that these benefits are fully taxable. However, the IRS reminds taxpayers that withholding is completely optional. Taxpayers can elect to have a flat 10% withheld from their unemployment compensation and paid over automatically to the IRS. For more information on the rules for making estimated payments, visit Tax Facts Online.

Must a taxpayer make estimated tax payments and what is the penalty for failure to make a required installment payment?

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