Tax Tips for Unemployment Benefits
As crazy as it sounds, the government taxes unemployment benefits at both the federal and state levels. Fortunately, there is a good chance you will get a tax refund if you have had taxes withheld, and qualify for one of the many available credits.
What Do I Pay Tax On?
- Any severance or unemployment benefits received are considered taxable income. If you received unemployment benefits, these will be reflected on a form 1099-G, which shows income received from a government source.
- If you elected to have taxes automatically withheld, you will likely not have to pay more taxes, and you may even receive a refund.
- Note: Even if you had taxes withheld, you still have to file a tax return.
Tax Deductions You Need To Know
- Job Search Costs – If you spent money while searching for a job during 2010, these costs are deductible. Examples include transportation (e.g. gasoline), phone calls, and supplies (e.g. resume printing).
- COBRA & Health Insurance – If your healthcare costs amounted to more than 25% of your income, these costs may be tax deductible.
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While filing taxes may not be the most fun activity, the good news is you can save money by doing them yourself. H&R Block is easy to use and offers free preparation and filing of your return. Note: Their website is has a secure connection, so it may take a minute for the page to load. |
Tax Credits You Should Be Aware Of
- Earned Income Tax Credit – If your income for 2010 was below a certain level, you can receive a credit of up to approximately $5,700. To qualify, your income has to be approximately below $14,000 (if single, with no qualifying children) all the way up to approximately $48,000 (if married, with 3+ qualifying children).
- American Opportunity Credit – This new tax break provides a credit for educational expenses. You can receive a tax credit of up to $2,500 if you have paid at least $3,000 toward educational expenses during 2010. To qualify, your income must have been less than $90,000 if single, and $160,000 if married.
Reminder
- Taxes are due by April 18th this year. If you would like more time, you can always file for an extension.
- To file now and to help maximize your refund, take a look at the Free Tax Filing resources in the box above.
- Remember, the sooner you file, the faster you’ll get your refund.
- For more details on specific tax policies, visit IRS.gov.
What Do YOU Think???
- Should unemployed Americans be required to file taxes?
- Got any good tax tips?
- Should the US government help out its own citizens before giving billions to foreign countries?
Please share any of your thoughts by leaving a comment below …
I agree with much of what peoples comments are that I am reading here.
Who can afford to have taxes withheld from there unemployment I can’t. I can barely pay my bills with the little check I get from unemployment and I have cut back on everything I can. Why should anyone have to pay taxes on unemployment when our government is the reason why tens of millions of people have lost their jobs and are forced to use unemployment?
TWM
I cant understand how federal reserve just loaned Greece $500,000,000 yet cant help own CITIZINS. No foreign aid,nothing,until we are covered.
I have money taken out from my unemployment insurance. This is just more goverment theft from the tax payers. They give you your own money with one hand and take it away with the other hand. This is our money and the US government works for all of us.
People who are long term unemployed need every dollar just to live on and purchase the basic needs.
JRS
How is unemployment insurance your money? UI is employer-paid.
i did not have tax withheld from unployment but i file a 1040 x and got back some money for 2008-2010
I feel that the wages have already been taxed so you are already at a disadvantage loosing a job and taking a heck of a reduced pay cut. The unemployment rate is off the record now more and more job losses and most companies just trying alot of deceatfull tactics to terminate or lay off employees at a mutch higher pay scale to hire new people in a a way reduced rate and not offer decent benefits. A employee that is dedicated is what keeps the quality service of a company going,however it all depends on the company that you work for and your Management team.
No nobody should be paying taxes on unemployment insurance. They are unemployed The employer pay’s unemployment taxes. We are unemployed. Already some monies are already taxed over and over again. Enough already.
I can’t believe that they make us pay tax on unemployment insurance benefits!! If anything, we should at least be able to put off payments until we’re back to work.
Anyway, I lost my job over a year ago, and have been getting new training over the last six months with online courses. HOpefully it’ll be complete by the summer, and I’ll be back to work soon!
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