Five Important Facts About Your Unemployment Benefits

Taxpayers who accepted unemployment benefits in 2009 are eligible for a special tax benefit as they file their 2009 federal income tax returns. This tax benefit is part of the American Recovery and Reinvestment Act of 2009.

Here are 5 crucial facts the Internal Revenue Service wishes you to know about your unemployment benefits.

  1. Worker’s Compensation Exemption

    Unemployment benefits typically includes any unemployment funds paid under the unemployment compensation laws of the United States or of a particular state. It includes state unemployment insurance policy benefits, railroad unemployment compensation benefits and benefits paid to you by a state or the District of Columbia from the Federal Unemployment Trust Fund. It does not include worker’s compensation.

  2. First $2,400 Is Tax Exempt

    Commonly, unemployment benefits are taxable; but, under the Recovery Act, each individual who gets unemployment benefits during 2009 is entitled to exclude the first $2,400 of their benefits when they file their federal income tax return.

  3. Married Couple Procedures

    For a married couples, if both spouses received unemployment compensation benefits, then both parties are eligible to exclude the first $2,400 of unemployment compensation benefits.

  4. Form 1099-G

    Each taxpayer should receive a Form 1099-G, Certain Government Payments, which shows the total unemployment compensation paid to you in 2009 in data field 1.

  5. How To Fill Out Form 1099-G

    You must deduct $2,400 from the amount in box 1 of Form 1099-G to calculate how much of your unemployment compensation is taxable and must be reported on your federal tax return. Do not enter less than zero.

If you need help in filing your federal income tax, let us help. Call us today at 713-661-1040 for a FREE tax evaluation and make sure that your income tax preparation is completed on time by J.M. Trippon & Company CPAs.

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