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Unemployment benefits can help you get by in the event of job loss, but this money is subject to taxes just like any other source of income. How much your unemployment benefits are taxed depends on your filing status, tax bracket, and state of residence.

In this guide to unemployment benefit taxes, you’ll learn the ins and outs so you can pay Uncle Sam what you owe. Read on to find out:

•   Are unemployment benefits taxable?

•   How are unemployment benefits taxed?

•   What are tips for paying taxes on unemployment benefits?

Do You Have to Pay Taxes on Unemployment Benefits?

Yes, you do have to pay taxes on unemployment benefits. They are taxable like any other income. That means you won’t actually get to keep all the money the government gives you while you’re unemployed. You’ll have to give some of it back, just as you do on many other forms of money you receive. It’s simply part of being a taxpayer.

How Is Unemployment Taxed?

Now that you’ve learned that unemployment benefits are taxable, consider the details. How much are the taxes, is it just federal or state taxes too, and how do you pay them?

How Much Are Unemployment Benefits Taxed?

No matter which state you live in, your unemployment benefits are taxed at the federal level. That means everyone — including residents of states without income taxes — must pay taxes on unemployment compensation.

How much you owe depends on your filing status and tax bracket. The United States is on a progressive tax system: In general, the higher your adjusted gross income (AGI), the more you’ll pay in taxes.

For the 2025 tax season (filed in 2026) and the 2026 tax season (filed in 2027), there are seven federal tax brackets, ranging from 10% to 37%.

Before filing your taxes, you’ll receive a Form 1099-G, Certain Government Payments, reflecting your unemployment benefits. This form will indicate how much unemployment compensation you received as well as how much was withheld, if applicable. You’ll need this form, plus any records of quarterly payments (more on those below) when filing your taxes.

Unemployment Benefit Taxes at the State Level

When determining how much unemployment benefits are taxed, don’t forget that federal taxes may not be the only funds due. Depending on where you live, you may have to pay state income taxes on your unemployment compensation, too. Nine states do not have personal income taxes on what are considered wages:

•   Alaska

•   Florida

•   Nevada

•   New Hampshire

•   South Dakota

•   Tennessee

•   Texas

•   Washington

•   Wyoming

If you live in one of those nine states, you don’t have to pay state income taxes on unemployment benefits.

That said, four states that do have a state income tax also don’t tax your unemployment compensation:

•   California

•   New Jersey

•   Pennsylvania

•   Virginia

If you live in one of the remaining 37 states (or Washington, D.C.), you’ll have to pay state taxes on any unemployment earnings.

How to Pay Taxes on Unemployment Benefit

Like it or not, you’ll owe taxes (federal and maybe state) on any unemployment compensation. Now that you know how unemployment is taxed, consider how you can pay those taxes. You have two main options:

•   Have the taxes withheld like you would from a paycheck

•   Estimate and pay the taxes each quarter

Here’s a closer look at each option.

Withholding Taxes

When you initially apply for unemployment, you can ask to have taxes withheld from your payments. However, federal law has established a flat rate of 10% for tax withholding for unemployment benefits.

When you receive income as wages, you can usually specify how much you want to have withheld via filling out Form W-4.

If you expect to be in a higher tax bracket and need to pay more in taxes than what’s being withheld, you can make quarterly estimated payments for the difference.

If you’re currently receiving unemployment compensation and taxes aren’t being withheld, you can submit Form W-4V.PDF File , Voluntary Withholding Request, to initiate the 10% withholding on future benefit distributions.

Recommended: Does Filing for Unemployment Affect Your Credit Score?

Paying Quarterly

To avoid owing an underpayment penalty when you file your taxes, you may need to make quarterly estimated payments on your unemployment earnings. You can use Form 1040-ES and send in your payment by mail, or you can pay online or over the phone.

If you’re new to estimating taxes, you can use the IRS resource for quarterly taxes , work with an accountant, or use tax software.

Tips for Paying Taxes on Unemployment Benefits

Being unemployed can be stressful, and on top of that, it may be hard to figure out how to properly pay taxes on unemployment benefits you receive. Follow this advice which can help simplify and clarify the process.

•   Opting into tax withholding: When you apply for unemployment, you can opt into automatic tax withholding at a flat 10% rate. While it may not be enough to cover your entire tax liability, it’s a good start — and can keep you from overspending your unemployment compensation.

•   Setting aside money in a high-yield savings account: If you don’t opt in to withholding (or if 10% is not enough to cover your tax liability), you’ll need to pay quarterly estimated taxes on your unemployment income. To avoid accidentally spending that money before it’s due, it’s a good idea to calculate what you’ll owe and put it in a savings account that pays a competition rate that you won’t touch until it’s time to pay Uncle Sam. Bonus: You’ll be earning interest on the money.

•   Keeping track of all your earnings and paperwork: Tax filing can be complicated — there are lots of forms to collect and statements to reference. Keeping clean records of benefit distributions and quarterly payments throughout is crucial to preparing for tax season.

•   Using IRS Free File: Because you have to pay taxes on all income, including unemployment, you’ll likely want some help. If your adjusted gross income is $89,000 or less, you can get free guided tax preparation software through IRS Free File . If your AGI is too high but you’re feeling overwhelmed by how complicated your taxes are, it might be a good idea to pay for tax software or hire an accountant.

•   Being aware of unemployment fraud: It’s possible for criminals to use your personal information to falsely make unemployment claims in your name. If you receive Form 1099-G for unemployment compensation but did not receive any unemployment benefits, follow the Department of Labor’s steps for reporting unemployment identity fraud .

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The Takeaway

Like other forms of income, unemployment benefits are subject to taxes. If you aren’t having taxes withheld from your unemployment compensation — or if the flat 10% rate is not high enough — the IRS requires that you pay quarterly taxes. Paying what you owe on unemployment benefits is an important and necessary step in correctly filing your tax return.

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FAQ

Do you pay less in taxes when you’re on unemployment?

Your tax rate depends on your adjusted gross income. If you earned less income because you were unemployed — and your unemployment checks are smaller than your paychecks had been — you can expect to pay less in taxes.

Are unemployment benefits taxed in states with no income tax?

Unemployment money is taxed at the federal level no matter which state you live in. However, if you live in a state with no state income taxes, you won’t have to pay state taxes on your unemployment benefits. Four states that levy income taxes also exempt you from paying those state taxes on unemployment compensation: California, New Jersey, Pennsylvania, and Virginia.

Was pandemic unemployment taxed?

Pandemic unemployment was not taxed for the 2020 tax year — to a certain degree. Following the historic job loss associated with the initial wave of COVID-19, the government passed the American Rescue Plan Act of 2021, which made the first $10,200 of unemployment benefits non-taxable.

However, this was a one-time exclusion. Though the pandemic continued beyond the 2020 tax year, unemployment income became completely taxable once again.

Photo credit: iStock/PixelsEffect

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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SOBK0224013
CN-Q425-3236452-135

If you’re a student or a recent grad, you are likely just starting your financial life and looking for ways to economize. One way to do that is to learn about the tax deductions and credits that can often help you lower your tax bill whether you’re still in school or just got your degree.

Here, you’ll learn about more than 20 possible ways you can save on your tax bill. But keep in mind: Taxes can get complicated. If you have any outstanding questions or concerns about your specific situation, consider consulting with a tax professional.

Smart Tax Deductions for Young Adults

1. American Opportunity Tax Credit

If someone is still in school, they might qualify for The American Opportunity Tax Credit (AOTC). The AOTC allows people to take a student tax credit of up to $2,500 for tuition, fees, and course materials they paid for during the taxable year for an undergraduate education.

In addition, 40% of the credit, or up to $1,000, is refundable, which means that someone can receive it even if they happen not to owe any taxes for the year. To qualify, the taxpayer or their dependent needs to be pursuing a degree and enrolled half-time at the very least. A taxpayer can only take advantage of this for four years, no matter how long it takes the student to finish the degree.

2. Lifetime Learning Credit

Unlike the AOTC, the Lifetime Learning Credit (LLC) is available to vocational, graduate, and non-degree or vocational students, too. The maximum benefit? Up to $2,000 is allowed per tax return. To learn more about the differences between the LLC and AOTC and which one might be right for you, see this IRS chart.

3. Student Loan Interest

Students and parents of students paying for a child’s education through student loans can use the student loan interest tax benefit for education. With this deduction, they can deduct up to $2,500 in interest they paid for the year.

4. Moving Expenses

Perhaps instead of going to college, a young adult enrolled in the military instead. If they are a Member of Active Forces on active duty and had to move due to a military order, then they could take a deduction for themselves, their spouse, and their dependents. On Form 3903, active members of the military can claim expenses related to a military move like transportation and storage of household goods and personal effects and travel (including lodging) from the old home to the new home. They cannot include the cost of meals.

The IRS has an interactive tool to help taxpayers determine whether or not their moving expenses may qualify for a moving deduction.

5. Self-Employment Tax

If a young adult chose to go into business for themselves after graduating, then they can deduct one-half of their self-employment tax, which is 12.4% for Social Security and 2.9% for Medicare. They can do this when figuring their adjusted gross income on Form 1040 or Form 1040-SR.

6. Home Office

Someone who works at home, whether they’re working at their job remotely or after hours, or they are self-employed, can take a deduction for their home office. Someone can deduct expenses that keep their home office running such as utilities, insurance, and general repairs, but they cannot deduct unrelated expenses like a gardening bill or the paint they used for a room that is not their office. There is a simplified method for this deduction as well as a regular one. With the simple one, taxpayers can deduct $5 per square foot of the home used for business, with a 300-square-foot maximum (see both methods on the IRS’ website ).

Recommended: Do You Qualify for Home Office Tax Deductions?

7. Standard Mileage Rate

If a young adult is using their car for business purposes, then they may be able to deduct the standard mileage rate, which is 70 cents per mile for tax year 2025. They need to keep in mind, however, that if they use the standard mileage rate, they cannot use the car expenses deduction as well. They cannot deduct lease payments, gasoline, car depreciation, vehicle registration fees, oil, or insurance.

8. Car Expenses

When a young adult does not use the standard mileage rate, then they can deduct car expenses that involve business purposes from their taxes. If they use the vehicle for personal and business expenses, then they need to split the deductions.

9. Meals While Traveling

When traveling for business, young adults who are entrepreneurs or self-employed can take a 50% deduction for their unreimbursed business meals. They can either take a standard meal allowance through the IRS or keep records of their actual costs for their meals and take those deductions.

10. Other Travel Expenses

The IRS also allows taxpayers to deduct some travel expenses. If young adults own their own business or are otherwise traveling for professional purposes, they could deduct things like travel by airplane, car, or train, fares for taxis to and from the airport to the hotel, the shipping of baggage, dry cleaning, and laundry, and business calls made on the trip.

11. Business Interest

If a young entrepreneur took out a business loan vs. a personal loan to get their startup running, then they can deduct the interest they paid. If they utilized the loan proceeds for more than one type of expense, then they need to allocate the interest based on how they used the loan’s proceeds.

12. 401(k) Contributions Deduction for Employed People

The government doesn’t tax money that an employee diverts directly from their paychecks into a traditional 401(k). For tax year 2025, the 401(k) contribution limit for individuals is $23,500; for tax year 2026, the limit is $24,500.

13. IRA Deduction for Self-Employed People

If someone does not have a job that provides a 401(k), they may be eligible to deduct their contributions to a traditional Individual Retirement Account (IRA). This can be a common tax deduction when you are self-employed.

You can learn more about the various kinds of IRAs and possible deductions from the IRS website.

14. Employee Pay

A young entrepreneur who has hired someone as an independent contractor may be able to deduct the income they pay that person on their tax return. You may want to check in with a tax professional if you hire contract workers or salaried individuals to make sure you stay on top of your taxes.

15. Educator Expenses

In 2025, a young graduate who is working as a teacher is able to deduct up to $300 of the expenses they put towards things they used in the classroom, such as books, courses, and computer equipment. If they teach a course in physical education or health, then athletic supplies would count towards the deduction as well. In 2026, the cap increases to $350. Teachers also have the option to itemize their qualified educator expenses with no dollar limit in 2026.

16. Health Savings Account

If a taxpayer chose to use a tax-deductible Health Savings Account (HSA) for their healthcare expenses, then they can contribute up to $4,300 for self-only coverage in 2025, and up to $4,400 in 2026. Note: An HSA is only available to people who have a high-deductible health insurance plan.

Recommended: HSA vs. FSA: What Are the Differences?

17. Home Mortgage Interest

If a young adult is fortunate enough to own their own home, they may qualify for the home mortgage interest deduction, which allows them to deduct home mortgage interest on the first $750,000 of their debt.

18. State and Local Tax Deduction

Under federal rules, taxpayers who itemize may be able to deduct up to $40,000 of certain state and local taxes from their taxable income in 2025. In 2026, the cap increases to $40,400.

19. Charitable Contributions

Young adults who itemize may be able to deduct charitable donations on their return in 2025. In 2026, taxpayers can either itemize their charitable contribution deductions or take an above-the-line deduction (up to $1,000) if they claim the standard deduction.

20. Medical Expenses

Healthcare is very expensive, but the IRS allows taxpayers to deduct the amount of total medical expenses that exceed 7.5% of their adjusted gross income (AGI). Medical expenses include payments for diagnosing, preventing, and mitigating disease.

21. Residential Energy Credit

If a young adult is lucky enough to own their own home and invests in qualifying clean energy (think heat pumps, solar panels, geothermal energy), they may be able to claim up to 30% of the costs as a tax credit in 2025. (Note: this credit expires on December 31, 2025.)

The Takeaway

Making smart use of tax deductions can help maximize a tax refund or minimize tax liability. Even if you are a student or a young person, you may be able to claim deductions and credits that make a difference on your tax return. You might even qualify for a tax refund that you could use to pay down debt or sock away in the bank to earn interest.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

About the author

Kylie Ora Lobell

Kylie Ora Lobell is a personal finance writer who covers topics such as credit cards, loans, investing, and budgeting. She has worked for major brands such as Mastercard and Visa, and her work has been featured by MoneyGeek, Slickdeals, TaxAct, and LegalZoom. Read full bio.

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOBNK-Q424-106
CN-Q425-3236452-141

If you miss the annual deadline for filing your income taxes, you don’t necessarily need to panic. Missing that tax filing deadline may not mean a big penalty, and you may have more options than you think. However, it can be wise to take steps to remedy the situation as soon as possible.

For 2025 tax returns, the deadline is set for April 15, 2026; for 2026 tax returns, the deadline is April 15, 2027. If you’re wondering what might happen if you miss that date, read on.

When Is the Tax Filing Deadline?

Usually, the tax-filing deadline is April 15 for the prior year. However, if April 15 falls on a Saturday, Sunday, or a legal holiday, the deadline is pushed to the next business day.

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Reasons Why Someone Might Miss the Tax Filing Deadline

Turning in school papers, paying your credit card bill, applying for rebates: Life is full of deadlines that sometimes are missed. Missing the deadline for taxes is no exception. Here are some common reasons why people don’t file on time:

•   You think you don’t owe any money and figure, why bother to file?

•   You think you do owe money but can’t afford to pay your tax bill, even if you deplete your savings account, so you avoid it entirely.

•   You are missing tax documents and didn’t have time to hunt for them or know where to find them.

•   You ran out of time to get organized and file or simply procrastinated.

•   You had trouble understanding taxes, got stressed out by the process, and didn’t get it finished.

•   You couldn’t afford a tax preparer but realized you didn’t know how to file on your own.

•   You got sick or injured or had a family emergency that interfered with filing.

•   You had a change in status (i.e., were in the middle of a divorce or became widowed) and didn’t know how to file in those new circumstances.

Recommended: 7 Tips to Managing Your Money Better

Are There Penalties for Missed Tax-Filing Deadlines?

“What happens if I miss the tax deadline?” you may wonder. The answer is: It can cost you. For individuals, the IRS can levy penalties for a few infractions related to the annual tax filing deadline. Here’s a closer look:

The most common punishment for this offense is a late payment penalty that’s equal to 0.5% of the money owed. But it’s important to be aware of these finer points:

•   The IRS can penalize a taxpayer for “failure to file,” which occurs when a person fails to file their tax return by the appropriate April date or by the date specified if the person requests and receives an extension. The IRS can levy a penalty of 5% of the taxes owed per month for each month that the taxes are owed after the April filing deadline passes if you didn’t get an extension. This hits a cap of 25% after five months and can’t go any higher.

•   Another infraction when missing the tax deadline is “failure to pay.” This occurs when a taxpayer doesn’t pay the money they owe on their tax return, even if they file on time. The most common punishment for this offense is a late payment penalty that’s equal to 0.5% of the money owed. That may not sound like much, but it’s due every single month, until the tax is paid in full. And that penalty can be as much as 25% of the overdue taxes.

•   What if both “failure to pay” and “failure to file” penalties are applied in the same month? In this case, the “failure to file” penalty will be lowered by the sum of the “failure to pay” penalty applied that month.

•   The IRS can also penalize taxpayers for failure to pay estimated taxes over the course of a year. The penalty will be calculated based on the amount of the underpayment, how long the taxes were left unpaid, and the interest rate the IRS charges.

•   Another reason the IRS may charge a penalty is if your check to the government bounces. You will likely be assessed an additional 2% on the amount owed to the government.

One last note: You may wonder what happens if you file just a day or two late. It does matter! Even a single day late counts against you; the IRS takes deadlines very seriously.

Recommended: Tax-Deductible or Not? A Guide to Year-End Donations

How Do Extensions Work?

There are years when completing your taxes by the April deadline is just too much to accomplish. Preparing for tax season and completing a return isn’t always simple. As a taxpayer’s financial life evolves, filing can become quite complex and time-consuming. And even if you use a professional tax-preparer, April can be an extremely hectic time for them, and they may not be able to fit you in before the big deadline.

So what happens if you’re missing the tax deadline? Don’t just sit back. This is when an extension may come in handy.

•   The way to get one is to file an IRS Form 4868 , which is an application for permission to take an extra six months (until October) to file your taxes. Taxpayers, however, can’t be late when requesting the extension. You have to submit the form by the April deadline.

•   You can file for an extension online or by mail.

•   An extension only applies to filing your return. It’s important to note that you still have to send the IRS a check for your estimated taxes by April 15 or whatever the due date is in a given year.

•   If you take, say, another month to file the complete return and you owe more than you estimated on Form 4868 in April, you may face penalties for the shortfall.

•   Those penalties will typically grow with each month you take to file, even with the extension.

•   If you overestimate the taxes you owe and pay too much by the April deadline, then you’ll receive a refund after you eventually file.

What Deadlines Mean If You’re Owed Money

All of this discussion about deadlines and penalties ignores one issue: What does all of this mean if you expect to get money back from the government in the form of a tax refund?

A tax refund happens if you overpay your taxes over the course of a year, whether through your regular paycheck deductions, quarterly payments, or other means. When you file your return, it’s a chance to get that money back. Tax refunds are very common — in 2025, the IRS issued 102,122,000 refunds, totaling $311.651 billion.

All of the deadlines and penalties described so far apply to anyone who owes money to the IRS in a given year. For taxpayers who are owed money by the government, the rules are different. Some specifics:

•   There is no late-filing fee for taxpayers who file returns requesting a refund from prior years.

•   The annual tax filing deadlines have a different significance for people who will receive a refund check from the IRS. For these taxpayers, there’s a real incentive to file taxes ahead of the deadline. The sooner you file, the sooner you’re likely to receive your refund. The IRS says it issues roughly 90% of its refunds in under three weeks, though it warns that some returns require additional review and may take longer as a result.

•   After a return is three years overdue, the IRS will no longer pay that money. The good news is that there is no late-filing fee for taxpayers who file returns requesting a refund from prior years.

It may seem unlikely that people would leave money unclaimed, but consider this: In March 2025, the IRS announced a last call for more than $1 billion in unclaimed income tax refunds due to individual taxpayers who never got around to filing their 2021 federal income tax returns. Those unclaimed funds eventually become property of the U.S. Treasury.

So, as you see, it could definitely pay to file that return.

Tips for Filing a Late Tax Return

If you missed the tax filing deadline or know that’s going to happen, here’s advice:

•   You can file the IRS Form 4868 requesting an extension by the tax filing deadline. Even if you do file for a tax extension, however, know that any funds owed are still due by the April date, but you may be able to send in the actual return later.

•   Always file your return as soon as possible. You may want to contact a tax professional to assist you with this, or you can reach out to the IRS for help. You might want to call the IRS Tax Help Line at 1-800-829-1040 or visit your local IRS office.

•   If you owe money but can’t pay it all at once, pay as much as you can, as soon as you can, and look into available options, such as payment plans with the IRS. These can give you an extended timeframe in which to pay what you owe. You may want to consult the IRS’ online Payment Plan tool.

Tips for Getting Your Taxes in on Time

Now that you’ve read about how complicated it can be if you miss the tax filing deadline, here are a few tips to help you get those returns in on time:

•   Get organized early. Gather all the records you’ll need to file (such as a W-2) as they become available.

•   Check against last year’s return to see if there were any forms you had then (say, a Form 1099 reflecting interest on a bank account) that you don’t have now. Track down anything that’s missing.

•   Create or log into an account at IRS.gov to make tracking your progress easier. You can make payments there, too.

•   Make sure you’ve withheld enough money so that you don’t owe too much when you file. If you do wind up having to pay a significant amount, develop a plan early to pay it on time or as close to on time as possible.

•   Know your banking details or open a bank account so that you can use direct deposit, which is usually the fastest way to get a refund.

The Takeaway

Life happens: Sometimes, despite your best intentions, deadlines get missed. When that happens with tax filing, though, there can be some very real financial penalties involved. That’s why it’s important to know when your tax returns are due and then do everything in your power to file on time.

If you can’t get your return finished by Tax Day in mid-April, know the right moves to request an extension and possibly look into a payment plan for money owed that you can’t pay all at once. Having your bank account information handy, especially when you are due a refund, can be valuable.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

When is the tax deadline?

The deadline for tax-filing is usually April 15 for the previous year’s taxes. However, if that date falls on a weekend or holiday, it will move forward by up to a few days.

How long are the tax extensions given if I miss the tax deadline?

The usual tax extension is six months. However, this is a longer timeline to file your return. Funds owed are still due in April. It can be wise to pay as much as possible towards your total debt to the IRS by Tax Day, and then send the remainder as soon as possible, perhaps via a payment plan with the IRS.

What happens if you miss the tax deadline by one day?

The IRS takes deadlines seriously. For every month that you are late filing your return, you will be assessed a penalty on the total amount owed. That wording of “a month” does not mean the first 30 days after the deadline are a kind of freebie during which you can send in your return and any payment due without penalty. Rather, being even a single day late puts you into that “one month” late category.

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
This content is provided for informational and educational purposes only and should not be construed as financial advice.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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You may wonder if anyone balances their bank account manually anymore given how many aspects of personal finances have become electronic. However, tracking withdrawals and deposits and tallying up amounts can have value.

Monitoring your checking account in this way can help you identify errors or fraud. It can reveal charges and fees you may not have known you were being assessed. It can also put you in better touch with your money and your spending. All those things are definitely positives.

This guide will help you learn the step-by-steps for balancing your checkbook as well as its benefits.

How to Balance a Checking Account Step-by-Step

Here’s how to balance your checking account. It can take a little time and effort but rewards you with control over your finances.

Step 1: Gather Your Bank Statement and Transaction Records

Start by gathering the receipts and records for spending and deposits for the period chosen. If you use a check register, grab that. If you write your purchases down in a notebook or use software or a spreadsheet, use those. If you collect ATM receipts, pull that pile together, too.

Step 2: Compare Deposits and Add Any Interest Earned

Next, you’re going to match those records with the bank statement. Many people review these online or in their bank’s app; some people may still get hard copies sent by snail mail.

In this step, you’re specifically looking for deposits. Make sure you have accounted for every transaction. If you missed something the bank has listed and you’re sure it’s accurate (for example, or a birthday check you deposited and forgot about), add it to your records. Factor in any interest you may have earned on the amount of money in your account.

Step 3: Check Off All Cleared Withdrawals, Payments, and Debits

Go ahead and make sure you have included all debits. This can mean any withdrawals from the ATM, autopayments, debit card transactions, and other transactions deducted from your account. This will help you get to the true bottom line of your account.

Step 4: Subtract Any Bank Fees or Service Charges

Don’t forget to account for any bank fees and service charges. Perhaps you keep your accounts at a fee-free bank, or maybe you pay a maintenance fee and overdraft charges from time to time. Check your statement and account for any such fees.

Every little bit counts: If you use fee-free ATMs, great, but if you paid a few dollars as a fee, don’t forget to account for that as you do the math.

Step 5: List and Total All Your Outstanding Transactions

Take note of any transactions that are pending. Did you deposit a check by mobile deposit last night that hasn’t fully cleared yet? Do you have an autopay that’s currently processing? Consider what might be about to hit your account and add or subtract it.

Reconcile Your Records With the Bank’s Balance

Now for your account reconciliation: The amount you come up with should match with the balance you have in your register/notes/spreadsheet and jibe with what you are seeing online or in app, once pending transactions are accounted for. If it doesn’t, you may have to do a closer check to see what you might have missed or if your math is a little off.

If you’re confident that the bank made a mistake or you notice anything else askew, contact the bank by phone, email, messaging, or in-person right away to let them know about the inconsistency.

Modern Tools to Help You Balance Your Account

If the thought of doing this reckoning and the math has you in a cold sweat, relax. There are tools to help you balance your checking account with less stress.

Using Your Bank’s Mobile App and Website

Your bank’s app and/or website can typically play a major role in balancing your account. By checking these options, you can see your real-time balance, transaction history, and digital statements. You can also likely glean spending insights that help you match your records to the bank’s, not to mention budget better.

You can also uncover errors this way. You use these tools to see what your bank knows and then compare that to your records to find discrepancies.

Using a Personal Budgeting Spreadsheet

Another system that can help you balance your account is a budgeting spreadsheet. There are many variations of these templates available online. It can be a smart move to start with one that is free to download. Digital spreadsheets vs. physical ones can offer the benefit of automatically doing the math for you as you enter your starting balance, credits, debits, and other bits of data.

If you’re the kind of person who enjoys working on a hard copy, you can print out these spreadsheets or buy paper ones at a local office supply retailer or perhaps a big box store.

Why Is Balancing Your Checking Account Still Important?

Balancing your checking account is still important because it helps you manage your money better, even in this era of online banking.

It Helps You Catch Bank Errors and Overcharges

Even if you are a fastidious record keeper, logging every cash withdrawal, bill payment, and deposit into a paper ledger, spreadsheet, or app, we all make mistakes from time to time.

Maybe an ATM receipt went missing or a bill payment was forgotten or recorded incorrectly. Or perhaps you were double-charged by a merchant. By reconciling an account regularly, these little mistakes can be quickly fixed. Banks also can make errors in rare instances. Balancing your checking account can allow you to bring a possible mistake to the attention of customer service.

It Helps You Spot Fraudulent Activity Sooner

Every time a person makes an ATM withdrawal, pays for gas with a debit card, or places an order online, there’s a slight chance that a scammer will intervene.

Consumers who check their accounts regularly may have a better chance of spotting fraud faster, limiting their own liability and helping the bank deal with potential problems.

It Gives You Control Over Automatic Payments and Subscriptions

Automatic bill payments are convenient and can help an account holder avoid late payments (and late fees).

But the downside is that those bills might not get the same attention as those paid every month by check, phone, or online. Ready or not, the money comes out of the bank account as scheduled, and if the account is low on the payment date, it can lead to bounced checks and overdraft fees.

Account holders who check their statements regularly may find they’re more aware of and prepared for the amount and timing of their autopay charges. They also might find they’re ready to dump or reduce the cost of some of the services and subscriptions they’ve been paying for from their checking account every month or year.

It Provides a Clear Picture of Your Spending Habits

Balancing your checking account can benefit those who need or want to take more control of their spending to see exactly where their money is going every day, week, or month.

Regularly scheduled reconciliations enable people to see exactly how much they’re spending every week on nonessentials, such as in-app purchases or happy hours. This kind of information can help people budget more effectively and help bring them closer to their savings goals, such as a downpayment on a home.

Recommended: ATM Withdrawal Limits — What You Need To Know

The Takeaway

Balancing a bank account every month can serve as an important backup and safeguard, especially for those who have multiple accounts, or who have turned over certain financial tasks (say, bill paying and budgeting) to automation and apps. It can also help you avoid unnecessary fees, spot mistakes or fraud, and enable better budgeting and money management.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

How often should I balance my checking account?

How often you should balance your checking account can vary. Financial experts recommend a minimum of once a month, with some saying weekly is a good cadence. If you conduct a lot of transactions, an even more frequent rhythm can be best.

What should I do if my checking account doesn’t balance?

If your checking account doesn’t balance, it’s wise to dig in and reconcile the account, looking for missing and pending transactions, fees you forgot about, and math errors. If you can’t find an error or if you see any unauthorized or incorrect activity, contact your bank immediately.

Do I need to balance my account if I use a banking app?

It’s a good idea to balance your account even if you use a banking app. The reason: Apps can’t necessarily catch instances of fraud or mistakes the way you can, and they may not show pending transactions (like an upcoming autopay) in a way that allows you to manage your money optimally.

What is the difference between my current balance and my available balance?

Here’s the difference between these two amounts: Your current balance reflects money in your account for all transactions that have cleared or are in the works. Your available balance, however, shows what you can spend right now. It doesn’t include transactions that are still pending or processing, nor does it reflect any funds that have a hold on them.

What is a check register and is it still used?

A check register is a ledger (often in booklet form) that is filled out to track bank account activity, such as deposits, checks written, and ATM withdrawals. This serves as a tracker for account activity and current balance. Some people still use them; others prefer online tools to keep tabs on their money.

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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